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.

Summary: Truth in Accounting Act of 2007 - Requires the Secretary of the Treasury to include in the audited financial statement of executive branch accounts of the previous year a calculation of the net present value of the overall fiscal exposures of the U.S. government.

Requires such financial statement to include a program-by-program calculation of: (1) the generational imbalance; (2) the fiscal imbalance; and (3) the total amount of the fiscal imbalance plus the public debt.

Instructs the President, in preparing the federal budget, to take this financial statement into consideration, including the effect of the overall budget upon: (1) the generational imbalance calculation and the fiscal imbalance calculation; and (2) the net present value of the overall fiscal exposures of the federal government.

Directs the Secretary to testify each year before Congress on the financial statement for the preceding fiscal year.

Directs the Comptroller General to: (1) assess the financial condition of the U.S. government in an annual report to Congress; and (2) testify before Congress on that condition, upon request.

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.