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.

Summary: Truth in Accounting Act of 2006 - Amends federal law to require the Secretary of the Treasury to include in his audited financial statement of the previous year a calculation of the net present value of the overall liabilities and commitments of the U.S. government.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Truth in Accounting Act of 2006''.

SEC. 2. PREPARATION OF NET PRESENT VALUE CALCULATION OF MAJOR 
              LIABILITIES AND COMMITMENTS 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 liabilities and 
                commitments 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) 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.