HR 3958 - Truth in Accounting Act of 2007

HR 3958

110th CONGRESS
1st Session

H. R. 3958

To amend title 31, United States Code, to require certain additional calculations to be included in the annual financial statement submitted under section 331(e) of that title, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

October 24, 2007

Mrs. BACHMANN (for herself, Mr. RYAN of Wisconsin, Mr. KIRK, Mr. FEENEY, Mr. HERGER, Mrs. BLACKBURN, Mrs. BONO, Mr. ROHRABACHER, Mr. MILLER of Florida, Mr. SOUDER, Mr. FLAKE, Mr. HOEKSTRA, Mr. SHADEGG, Mr. GOODE, Mr. DOOLITTLE, Mr. FORTUN.AE6O, Mrs. MYRICK, Mr. WELDON of Florida, Ms. FOXX, Mr. CARTER, Mr. DANIEL E. LUNGREN of California, Mr. COOPER, Mr. HENSARLING, Mr. GARRETT of New Jersey, Mr. CAMPBELL of California, Mr. CULBERSON, Mr. SENSENBRENNER, Mr. BURTON of Indiana, Mr. DAVIS of Kentucky, Mr. BARTLETT of Maryland, Mr. CONAWAY, Mr. PITTS, Mr. LUCAS, Mr. CANTOR, Mr. DAVID DAVIS of Tennessee, Mr. WALBERG, Mr. KLINE of Minnesota, Mr. GOHMERT, Mr. BARRETT of South Carolina, and Mr. PAUL) introduced the following bill; which was referred to the Committee on Oversight and Government Reform, and in addition to the Committee on the Budget, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

A BILL

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Truth in Accounting Act of 2007'.

SEC. 2. PREPARATION OF NET PRESENT VALUE CALCULATION OF MAJOR FISCAL EXPOSURES OF THE FEDERAL GOVERNMENT.

(a) In General- Section 331(e) of title 31, United States Code, is amended by adding at the end the following:

`(3) NET PRESENT VALUE CALCULATION AND OTHER CALCULATIONS-

`(A) MATTERS COVERED- The financial statement shall include a calculation under policies in effect during the fiscal year covered by the statement of the net present value of the overall fiscal exposures of the United States Government. The calculation shall include--

`(i) the outstanding debt held by the public;

`(ii) calculations of the net present value of commitments and receipts of the Federal Old-Age and Survivors Insurance (OASI) Trust Fund, the Federal Disability Insurance (DI) Trust Fund, the Federal Hospital Insurance (HI) Trust Fund, and the Federal Supplementary Medical Insurance (SMI) Trust Fund using the most recent available long-term, intermediate projections by the Trustees of such Trust Funds of revenues, expenditures, and discount factors, as represented in such annual reports;

`(iii) calculations of the net present value of commitments and receipts of the Railroad Retirement and Black Lung (part C) programs;

`(iv) calculations of the net present value of commitments and receipts of the Federal retirement and health insurance systems, both civil and military.

`(B) TIME HORIZON- (i) For each calculation under subparagraph (A), calculations shall be provided for--

`(I) a 75-year horizon; and

`(II) an indefinite time horizon.

`(ii) For the 75-year horizon under clause (i)(I), each calculation shall take each year's projected expenditures minus revenues, divide this difference by the projected discount factor for that year, and add the resulting 75 annual discounted flows to obtain the program's net present value imbalance. The long-term discount and growth rates used in these calculations shall be discussed in the financial statement and shall be consistent with those used by the Department of Treasury and other Government agencies with regard to other long-term financial calculations. For purposes of the calculations in clauses (ii), (iii), and (iv) of subparagraph (A), revenues shall include payroll taxes as allocated by law to the respective Trust Funds (currently the case for OASI, DI, and HI), participant premiums and State transfer income (for SMI), general revenue receipts from the taxation of benefits, as currently allocated by law to the OASI, DI, and HI Trust Funds, and funding for the Federal retirement and health insurance systems, both civil and military. For purposes of this calculation, revenues shall not include interest income on Trust Fund and transfers of general revenue to SMI, Social Security, or Medicare.

`(iii) For the indefinite time horizon under clause (i)(II), the calculations shall follow the procedures provided in clause (ii), but shall be based on extended projections for a number of years sufficiently beyond 75 years that would result in the present value sum increasing by less than 0.05 percent if an additional year were added to the projection.

`(C) GENERATIONAL IMBALANCE CALCULATION- The financial statement shall include a program-by-program calculation under policies in effect during the fiscal year covered by the statement of the net present value of benefits and projected benefits to current participants of the programs described in clauses (ii), (iii), and (iv) of subparagraph (A), including the present value of projected benefits to current participants, less the present value of projected contributions and earmarked taxes paid by, or on behalf of, current participants less the current trust fund balances.

`(D) FISCAL IMBALANCE CALCULATION- The financial statement shall include a program-by-program calculation under policies in effect during the fiscal year covered by the statement of the net present value of benefits and projected benefits to current and future participants of the programs described in clauses (ii), (iii), and (iv) of subparagraph (A), including the present value of projected benefits to current and future participants over the indefinite horizon, less the present value of projected contributions and earmarked taxes paid by, or on behalf of, current and future participants over the indefinite horizon, less the current trust fund balances.

`(E) PRESENTATION OF PUBLIC DEBT- The financial statement shall include the total amount of outstanding public debt (included in the statement pursuant to subparagraph (A)(i)), plus the total amount of fiscal imbalance calculations (included in the statement pursuant to subparagraph (D)), set forth separately by amount of debt per person, per fulltime worker, and per household.

`(F) METHODS USED- The financial statement shall include the assumptions and details of the methods used in making the calculations required under subparagraph (A). It shall separately identify and provide a detailed description of the methods and assumptions used in making projections of tax revenues, premiums, other receipts from all sources, including inter-fund transfers and interest income on securities held in trust funds, benefit outlays distinguished by the type of benefit, and administrative expenses. The financial statement shall also provide details regarding demographic assumptions (such as fertility, mortality, immigration, and labor-force participation rates), dependency ratios, and economic assumptions (such as trust fund interest rates, discount rates, revenue and benefit growth rates, health-care expenditure growth rates, productivity growth rates, and inflation rates). The information should include a description of all other intermediate steps and variables used and projected in making the calculations.'.

(b) Requirement for President to Use Financial Statement in Preparing Budget-

(1) REQUIREMENT- In preparing the budget for the United States Government for submission under section 1105 of title 31, United States Code, the President shall take into consideration the financial statement prepared by the Secretary of the Treasury under section 331(e) of such title, including the effect of the overall budget on the generational imbalance calculation and the fiscal imbalance calculation required under subparagraphs (C) and (D), respectively, of such section, and the effect of the overall budget on the net present value of the overall fiscal exposures of the United States Government.

(2) INCLUSION OF STATEMENT IN BUDGET- Section 1105(a) of title 31, United States Code, is amended by adding at the end the following new paragraph:

`(36) A statement describing how the financial statement prepared by the Secretary of the Treasury under section 331(e) of this title was considered in preparing the budget, as required by section 2(b) of the Truth in Accounting Act of 2007, including a statement of the effect of the overall budget on the generational imbalance calculation and the fiscal imbalance calculation required under subparagraphs (C) and (D), respectively, of such section, and the effect of the overall budget on the net present value of the overall fiscal exposures of the United States Government.'.

(c) Secretary of Treasury Testimony on Financial Statement- Section 331(e) of title 31, United States Code, is further amended by adding at the end the following new paragraph:

`(4) The Secretary of the Treasury shall testify each year before Congress on the financial statement for the preceding fiscal year required by this section, including the generational imbalance calculation and fiscal imbalance calculation required under subparagraphs (C) and (D), respectively, of paragraph (3).'.

(d) Comptroller General Report on Financial Condition of Government- Section 331(e) of title 31, United States Code, is further amended by adding at the end the following new paragraph:

`(5) The Comptroller General shall testify each year before Congress upon request. Not later than January 30 of each year, the Comptroller General of the United States shall submit to Congress a report containing an assessment of the financial condition of the United States Government. The report shall include--

`(A) an assessment of the generational imbalance calculation and fiscal imbalance calculation required under paragraph (3);

`(B) a statement of whether the President met the requirements of section 2(b) of the Truth in Accounting Act of 2007;

`(C) the results of the most recent long-term fiscal model simulation of the Government Accountability Office; and

`(D) such other fiscal matters the Comptroller General determines to be significant.'.

(e) Effective Date- The information required under paragraph (3) of section 331(e) of title 31, United States Code, as added by subsection (a), shall be included in the first financial statement required under that section after the date of the enactment of this Act.

END