Entitlements and pension funding are huge issues that no one seems to be addressing right now, Libertarian presidential candidate Gary Johnson said Thursday.

The former New Mexico governor and his running mate, former Massachusetts Gov. Bill Weld, have pledged to submit a balanced budget to Congress in the first 100 days of their administration should they win in November.

"That would involve a 20 percent reduction in federal spending. Of course you can't do that without addressing entitlements," Johnson told CNBC's "Squawk Box."



Johnson said he would put Medicaid and Medicare in the hands of the states, which he called "50 laboratories of innovation and best practice." The innovations and practices developed at the state level could be emulated across borders, and failures would be avoided, he added.

He would also reform Social Security, for example by raising the retirement age and conducting means testing to determine whether those who collect should get back more money than what they paid into the welfare program, depending on income level.

"I think that's very doable, very fair," he said.