April 17, 2005


Mr. Gary Lee
866 Mountridge Court
Las Vegas , Nevada   89110-2911

Dear Mr. Lee:

      Thank you for contacting me to express your concerns
about Social Security.  I appreciate hearing from you and welcome
the opportunity to clarify U.S. Government budgetary practices
with regard to the Social Security Trust Fund.

      Social Security taxes are credited to the Social Security
Trust Fund.  However, when there is surplus of Social Security
income in excess of payments, this surplus is invested in special
Treasury securities.  These securities are backed by the full faith
and credit of the United States , and provide a market-based rate of
return to the Trust Fund.  The United States government has never
defaulted on its loans in its entire history, and these bonds are
widely considered to be among the most conservative and safest
securities available. 
     
      At the beginning of 2004, the Trust Fund held reserves
totaling about $1.5 trillion.  That amount will continue to grow in
coming years, as the Trust Fund continues to operate in surplus. 
Eventually, as baby boomers retire, spending will eventually
exceed the level of taxes and interest, and so the Trust Fund's
securities will have to be redeemed in order to pay guaranteed
benefits.  According to the Congressional Budget Office, there will
be sufficient assets in the Trust Fund to pay full benefits through
2052, at which point Social Security will be able to pay about 80
percent of scheduled benefits, which will be higher than today's
benefit levels.
     
      Some have raised the possibility that the federal
government may not honor its obligations to the Trust Fund, which
they suggest may create problems for the program before 2052. 
However, I believe it is very unlikely that the government would
renege on obligations backed by the full faith and credit of the
United States .  You can be sure that I will do all I can to ensure
that the government honors all these obligations, and that all Social
Security money used for other purposes is fully repaid to the Trust
Fund, with interest.  I am committed to ensuring that Social
Security continues to serve Nevada 's seniors for generations to
come.

      Again, thank you for taking the time to share your thoughts
with me.  For more information about my work for Nevada , my
role in the United States Senate Leadership, or to subscribe to
regular e-mail updates on the issues that interest you, please visit
my Web site at http://reid.senate.gov.  I look forward to hearing
from you in the near future.

      My best wishes to you.




Sincerely,

HARRY REID
United States Senator