will be sufficient assets to pay 75% of the current level of benefits. it's not acceptable, but it's still a fact that there will be substantial assets there. i want to note that this year's change in the disability insurance trust fund as with last year's is due almost entirely to demographics and the recession. in the past year there have been reports to the contrary and i urge you not to repeat that reporting. we need the debate to begin and we need it to be civil and fact based. clear and accurate reporting on the complexities of the system is essential to that debate. and to wrap up, this is the sixth trustees report i've signed. more than any other commissioner other than robert bald. and i would be remiss if i concluded my remarks without telling you what a tremendous primg it has been to serve as a

trustee. thank you. >> the social security medicare programs remain among the more remarkable legislative achievements in american history. these two programs have between them provided critical insurance protections for hundreds of millions of americans. they've done its a exceptionally low cost and they've done it with financing methods while they have their critics have been accepted by most of the american public as equitable. it's important to remember these achievements as we review this year's financing projections. this different respects both social security and medicare finances did take a further turn for the worst this year. as with every year the mere passage of time further constrains our options for bringing these programs to long-term solvency. but we need to remember as we review our options that the continued strength of these perhaps depends not only upon their finances being restored to balance, but this is done in

such a way the public continues to believe the reasonably fair. as time continues to pass and as program finances continue to become more strained, this becomes more difficult to achieve. first i'd like to note some differences between social security projection and medicare projections. social security does not tend to have large swings in this outlook from year to year. this is because the demographics that guide its finances for some time. medicare on the other hand faces greater projection uncertainty because factors with inflation are much more difficult to predict. we'll talk about the medicare side where we've had some offsetting projection changes in the short-term. some positive, some negative. and with social security side by contrast unfortunately this year most of the variables lined up on the negative side. as a result on the social

security side, both the short-term and the long-term outlook worsen somewhat. social security's is at 6.7% of taxable payroll. that's a term of art, but basically that's the program's tax base in worker wages. that's a 0.44 worsening relative to last year. the projected depletion date of the combined trust funds is now anticipated to be 2033. that's been moved up from 2036. so we've lost some ground not only because of passage of time and legislative action but it's weaker than prooeftsly

projected. the 2033 date is the earliest projected by the trustees in more than a decade of trustees reports. given the magnitude it's actually not. our window for dealing with it without actually disruptive consequences is closing rapidly. in 2033 as has been said we would have enough revenue coming in to pay 5% of scheduled benefits or the payroll tax would have to be raised from 12.4% to 16.7%. now that 25% benefit reduction one must bear in mind assumes we would be willing to cut benefits for people on the rolls.

when you factor into account the shared desire on the part of many policymakers to shield people already receiving benefits from changes. to reallocate the tax rates between the disability and retirement sides of social security. we have to remember that would shore up disability only at the expense of other social security trust fund. if we want to avoid weakening the other side of social security, we have to make some tougher choices we would have to otherwise decrease disability benefits or increase disability taxes considerably and fairly soon. we'd have to find roughly $30 billion of savings annually within the disable disability

programs starting within five years to prevent insolvency. why does this year's report show a decline in social finances. this affects our projections for 2013, 2013 and beyond. we also modified our expectations for long-term changes to worker hours to better fit historical data and the aging to have population. beyond this we have the usual grab bag of changes. we have the usual effect of simply the passage of time. we've also incorporated some updated birthrate data. unfortunately this year all the smaller factors generally lined up on the negative side of the line. that's unusual for social security reports, but it's ununfortunate reality this year. by any objective measure the problems in social security are

growing somewhat more serious. it's insolvency date is drawing closer. it's balance is larger. thank you. >> good afternoon being the last of the six prust tees to speak, i'll be very brief. the primary responsibility of the public trustees is to assure the american public that the financial and act daughter yal anl cease continued in the reports are as objective as possible. that they use the best available

data and information and they employ the most appropriate methodologies. i can speak for others as well as myself that we can provide that assurance with confidence to the american public. once again we have participated in a robust discussion of the numerous issues. once again we have been impressed by the expertise and commitment to objectivity of the actuaries and their staff. the department of staffs that support the trustees and is the staffs of the social security administration. this year we also benefitted from the deliberations and recommendations of two technical panels. the medicare technical panel convened by the department of health and human services and the social security technical panel by the board. we incorporated some but not all of their recommendations in these trustees reports. we intend to continue to draw on

these panels insights as we develop future reports. let me make a few observations now that relate to the content of these reports. first, i want to add my voice to the chorus that has emphasized that under current law both of these vitally important programs are run -- are on unsustainable paths. the sooner the policymakers address these challenges, the less disruptive the unavoidable disruptions will be both for individuals and for the economy and the greater the likelihood that the solutions we adopt for balanced and equitable. the bottom line message of the 2012 reports are -- differ little from those of previous reports. it is important to realize that the projections contained in these reports as others have emphasized include a lot of uncertainty. this is particularly true with respect to the medicare report in which the current law projections that are -- that are

the basis of this report assume that payments under the physician fee schedule will be cut by 30.9% at the start of 2013 to comply with the sustainable growth rate mechanism. it's almost certain that lawmakers will override this reduction and that medicare part b expenditures will therefore be higher conceivably as much as 12% higher than is reported in these reports for 2013. over the long run the challenges of medicare will differ to the discipline contained in the affordable care act. which in term will require significant transformations of the existing payment and delivery systems. the ability of providers to improve their productivity and the willingness of employer unions ando payers of private policies to join forces with medicare to demand change. even with the unified and

concerted effort further major legislative changes above and beyond the affordable care act will be required to put medicare on a sustainable path. let me close by saying that as someone who spent an hour yesterday applying for medicare because i've stepped down after 12 years as president of the urban institute, i have an even greater interest in ensuring the sustainability of both medicare and social security both for current and future generations of beneficiaries. thank you. >> what's the administration's plan to deal with that in the near term? is it to combine the two funds or direct money away from the fund? >> there's a precedent in the past congress faced this problem with less time to act and they

acted then with a tech rare solution. our judgment is to do a long-term solution. we're going to be working towards that with the congress. >> yes. >> hi. secretary, i'm curious in this report as in last year there's some question raised by the trustees and more forcefully by rick foster about whether the projections under the affordable care act will come to pass. do you have any thoughts since you've spent so much time defending the law and the significance of these projections, what does that mean there's some shadow hanging over that in such an important report? >> i think there has been traditionally i would say reluctance among congress afternoon to adopt payment reforms. and medicare advantage is a great example of that. it was begun with a floor intentionally above medicare fee for service. as a way to encourage

competition in the marketplace. but 15 years later we were still paying at the passage of the affordable care act 115% of fee for service in spite of the fact that people kept saying that needs to be lowered. the affordable care act has done that. the good news is in the last two years medicare advantage plans are now being paid at a rate 107% higher not 114% higher. we are on track to get to parity with fee for service but we are assuming that the payment reductions included many the affordable care act will indeed be carried out if congress chooses to interrupt those. if congress chooses to add additional fundsing then we have to make difference asuchgss. i think the skepticism is because often congress has intervened at times when there have been challenges about lowering cost and kept cost at a

higher rate than med pack or others would have seen advisable. >> senator hatch claims that the medicare advantage quality bonus demonstration program is wasting over $8 billion in taxpayer money. he questioned if hhs has the legal authority to even establish the program. how do you respond? >> i think as i've just told lester, the good news is that medicare advantage in spite of all of the allegations that somehow the affordable care act would destroy the program is stronger than ever before. we have more companies participating many the plan. for the first time ever consumers are actually getting information about quality ratings. we have more beneficiaries migrating to four-star programs than ever before. even with the demonstration due to expire in 2014 we are on track to reduce the overpayments of medicare advantage as i said with the demonstration money

included we've dropped from 114% of fee for service to now 107% of fee for service. so a cut in half the overpayment to medicare advantage. i think it's a basic win-win-win situation. beneficiaries are also paying lower rates. you've got lower rates. you've got more plans. you've got consumer information for the first time about quality programs and we're on track to reduce the overpayments which are substantially safe money in the long haul. >> last question. excuse me. >> i'm happy to have secretary geithner answer it. >> do you plan to let that demo run out and not renew it? >> that is certainly our plan. it is designed a as demonstration project. our goal is not only to give consumers information but actually to put medicare advantage plans on notice that we are measuring for the first

time as opposed to having a prolivery of plans available often very confusing to beneficiaries about what the differences are. we think this is a really important step. we are pleased to see that more beneficiaries are migrating to the higher rated plans. we think at the end of 2014 it will accomplish just what the goal was which is to give some incentives to plans improving quality results. one of the most discouraging factors around medicare advantage not only were those plans being paid 14% more than fee for service and 75% of the beneficiaries were picking up that additional cost because the cost was spread, but there was no increased health outcome as a result of that overpayment. so we think this demonstration was important to again inform consumers. we intend to keep the quality system in place not the

additional incentives. but again, medicare rate, medicare advantage rates are down substantially over where they were when the president two years ago signed the affordable care act. >> thank you all for coming. >> solicitor general represented the federal government in the arizona immigration law case wednesday. he was in front of the supreme court. paul clement represented arizona. the two were also the main lawyers in the health care case earlier this year. the court will decide whether arizona has the authority to enforce its own immigration law or whether that is the role of the froth. c-span will air oral arguments of the arizona immigration law starting tonight at 8:00 p.m.

eastern. that's on c-span. the u.s. general overseeing operations in the southwest of afghanistan says he has had no cooperation from the pakistani army in securing its border with afghanistan. major general john tullen spoke earlier at the atlantic council in washington, d.c. the u.s. will continue to defend the afghan military for at least ten years after the country formally takes control of its security according to an agreement signed earlier. this is about 45 minutes. >> i'll ask one question and then just look to the audience to continue the discussion. you gave us a good sense of sort of the threat specifically. but can you talk sort of more broadly about the taliban, you know, where are they now in your estimation? what's the chances of them

popping back up? i don't know that depends on the trajectory of the afghan security forces. can you give us a sense of where they are politically and militarily in your view? >> i think the taliban there's always going to be i believe a hard core element that is going to continue to install sharia law. i've seen some of those folks. i've had an opportunity to speak to tom of them. it's a hard core radical belief that this is the way they need to operate. what produced that, i'm not exactly sure. but i think they will continue to exist. currently they're operating on the other side of the border. they're operating in pakistan. they're operating in a safe haven for the senior leadership of the taliban as long as i've been there. we have tried in numerous ways to engage the pakistani army on

the border and to work with them. in my case 12th corp. in pakistan. at least it so that's where the taliban senior leadership are operating. the reintegration, reconciliation program that general allen has been encouraging the commanders to really use that program is focused on the midlevel and lower level taliban. really, the midlevel's been our objective. those are the ones, i just mentioned earlier, if you look at the midlevel taliban, they're residents of helmand province and kandahar. they come from those districts. in many cases, they turned taliban because the leadership in the local level at the time was abusive, totalitarian, authoritarian government. what we're seeing now is they're

wanting to come back into the fold. and it's all a result of making some progress. so there will be -- a taliban will exist. they'll always be -- i don't understand it but they'll always be people willing to kill themselves. to put a suicide vest on or drive a suicide vehicle. and they abuse that. the senior taliban abuse that. but i think they'll always be people willing to conduct that business. we always make sure to maintain our guard. so i'll end it there. but i mean -- i'll end it there. >> thanks. any questions from the audience? yes, in the second row here. >> hi, my name is -- [ inaudible ] hi, general, my name is gretchen peters.

[ inaudible ] if you could describe the nature of the enemy there. 'cause when i communicate with folks out in helmand these days, a lot of areas they seem to be -- the groups that they're fighting seem to be as much local criminal organizations, drug trafficking networks and another category that i sort of loosely describe as young men being stupid, but whether they're actually formally connected to the taliban other than paying tax to them or protection money is a lot harder for me anyway to figure out. >> that's a very good question. i will say that the nature of the enemy in helmand province varies depending on where you are. if you're in the south, basically explained, used the analogy that the taliban are completely on their back. they're not operating in the southern part, places like that, et cetera. in central helmand, which really is the responsibility of task

force helmand which is the uk forces, we use the analogy that they're on their knees. they're still getting support funding and i can talk in more detail but they're still getting funding through some of the criminal networks that are fueling the insurgent activity in central held monday. places like nari surage which today is the most kinetic district in afghanistan. it's changed dramatically over the past year due to some of the things we did this year. but so there is still some taliban insurgent activity there. then in upper helmand valley, places like haji ki. places like that, the taliban are on their heels, because we recently -- it was really the

last piece of real estate we cleared was haji ki dam. so they're on their heels. but behind them is a transit area for drugs, for poppy growth, that's owned by our friend that i just mentioned earlier, and his boys. they still own that territory. at this stage, we are no longer in the business of clearing real estate. it is now the afghans providing the security. so from south to north, it gets increase -- it's increased taliban involvement. taliban funding. et cetera. but you're absolutely right. there is -- there are a lot of local nationals who get themselves into trouble, who get an opportunity to make a few bucks by planting an ied. they're really not taliban. they're just people that quite honestly if we'd afforded them another opportunity for employment, they wouldn't be

taking the job. because if you look to the elders and the responsible people in helmand province, they're not supporting that. again, goes back to this -- i think we're the home team at this, we got the support of the local nationals, and it's building. >> yes, eric schmidt, in t middle. >> hi, general. eric schmidt with "the new york times." you said you've tried to engage 12th corps and pakistani army on the other side. what success, if any, have you had, getting them to help interdict fighters, ied materials, other things like that? thank you. >> unfortunately, from my perspective as a tactical commander in regional command southwest, i have had no support from 12th corps. i've -- we have tried to conduct operation -- conduct discussions and conferences and there always seems to be something that

interferes with that. it's an area that i know my boss at the time general allen and my ajc commander have been working very hard at. but it's difficult. because 12th corps -- as you know, helmand province has pakistan and iran as its borders. helmand and nimruz. on the pakistani border is a place called barum-cha. i know for a fact drugs are moving out of pakistan and lethal aid is coming in on a regular basis. barum-cha is a long way away from the helmand river valley. and so in order to provide forces down there to interdict, stop that, it detracts, takes away from effort that i'd like to be working in upper helmand river valley. if i had 12th corps, if i had

the pakistani army support, to at least conduct patrols along the border and limit the amount of movement across, it would really help. that's been my focus. but i haven't been able to really get that kind of support. >> thanks, general. another example of how critical pakistan is to this effort. second row. viola. >> thank you. bloomberg news. general, couple questions. one, you mentioned that it's really important to sideline the sort of actors that you were referring to in -- who is a senator now. how do you think is the most effective way to do that? and how difficult do you think it will be for the ansf and the remaining coalition forces in helmand to maintain the sort of progress that you've been describing after september when there will be a significant number of marines that will have been withdrawn at that point?

>> i guess two parts to that question. i will say that the first and the first question, akanazan is an individual who has a large financial investment in helmand province. a lot of it comes through the drug trade. he's got his hands all over it. and the only real way of changing his impact -- there's two ways. one is we have to do a better job of working the government of afghanistan's narcotics interdiction units, which are working very closely with the dea. dea is really doing a great job in teaching the narcotics interdiction unit and the

narcotics lead in the government of afghanistan in things which are challenging for the afghans, but they're getting better at it. things like collecting evidence. and doing criminal investigations. because it's got to move from paramilitary operations to legitimate criminal investigations. and using the rule of law to hold these people accountable. we're making progress but it's nascent. it's really only in the past year that the narcotics interdiction units and the government of afghanistan have been effective in collecting evidence and making a difference. but that has curtailed his activities and his cronies. it has curtailed that activity. so that's a good thing. that i think is going to pay dividends later on. the other thing i think is vitally important is that the central government has to,