INTRODUCTION OF THE TRUTH IN ACCOUNTING ACT OF 2007 -- (Extensions of Remarks - October 24, 2007)
SPEECH OF HON. PAUL RYAN OF WISCONSIN IN THE HOUSE OF REPRESENTATIVES WEDNESDAY, OCTOBER 24, 2007
* Mr. RYAN of Wisconsin. Madam Speaker, I rise in support of the Truth in Accounting Act of 2007, which I am introducing today along with Ms. Bachmann, Mr. Kirk, and Mr. Cooper. I am hopeful that this bipartisan legislation will shed greater light on the long-term fiscal challenges facing our Nation and will encourage Members to take a greater interest in addressing our out-of-control entitlement spending. At the same time, I am also hopeful our approach illustrates a potential way forward for the Federal Accounting Standards Advisory Board (FASAB) as they continue to discuss different options on how to account for our social insurance programs in the Financial Report of the U.S. Government.
* This legislation, which is similar to a bill introduced last session by Mr. Kirk, Mr. Cooper, and Mr. Chocola, consists of three main components. First, it requires the Financial Report to include an audited calculation of the net present value of our primary social insurance programs, such as Medicare and Social Security, among others. Second, it requires the President consider this value when making a budget proposal to Congress and fully reveal the impact of his proposal on our long-term fiscal situation. Finally, it also requires the Secretary of Treasury and the Comptroller General of GAO to testify before Congress and provide their assessment of our Nation's long-term fiscal exposures on an annual basis. I would like to briefly discuss each of these components in greater detail.
* The proposal to include the net present value of the Federal government's fiscal exposures comes from last year's Truth in Accounting bill. This provision would give the American public a clearer picture of the dire fiscal situation that we are facing, and it would require the Federal government to take responsibility for addressing this issue. According to the latest reports of the Medicare and Social Security trustees, we are staring at 75-year fiscal exposures of $32 trillion and $4.7 trillion for each of these programs, respectively. This means that the current level of projected revenues for these two programs is nearly $40 trillion less than is needed to pay for our projected spending on them over the next 75 years. If you include the other obligations of our government, our overall fiscal exposures are greater than $46 trillion over this time period, or about $375,000 for every full-time worker in the U.S.
* We cannot leave this problem unaddressed. The long-term health of our economy is at severe risk, as are the benefits that have been promised to our constituents. Including this figure in the Financial Report will finally force the federal government to level with its citizens and admit the daunting fiscal challenges we face. Furthermore, highlighting this problem will help encourage Members of Congress to take it more seriously, and to work on a bipartisan basis to address it.
* I am also hopeful that this aspect of our proposal can help FASAB find a compromise solution to its current impasse over a new set of accounting standards for our social insurance programs. Earlier this year, FASAB released a proposal that would recognize a liability for Social Security and Medicare once a beneficiary had completed 40 quarters of work in covered employment, the period of time required to qualify for these benefits. The liability would show up on the audited Statement of Net Cost and Balance Sheet contained within the Financial Report. This view was met with substantial controversy and FASAB is not expected to move forward with it.
* While I believe that FASAB's primary approach has a great deal of merit, I understand the critiques made against it. Opponents justifiably pointed out that this proposal fails to credit the government for the revenues that these programs are projected to receive over the same time period and perhaps inappropriately calls these commitments ``liabilities'' even though they do not represent contractual obligations. In addition, the primary proposal could make the current measure of accrual liabilities unusable since the size of the Social Security and Medicare components would dwarf the liabilities of other programs and possibly hide their own set of problems and concerns.
* Our proposal addresses all of these concerns. It would fully account for projected revenues, would use the terminology ``fiscal exposures'' instead of ``liabilities'' to reflect the true nature of the obligation, and would leave the current accrual measures untouched so they could still be used by policymakers. At the same time, it would ensure that a measure of our fiscal exposures is on the audited portion of the Financial Report for the first time ever. I am hopeful that this is the type of compromise that FASAB could accept. While it may not go as far as some of the board members and some Members of Congress may hope, I believe that it makes real, although admittedly incremental, progress at uncovering the true nature of our long-term obligations.
* The second component of this bill comes from an amendment Mr. COOPER offered during consideration of the House Budget Resolution in 2006, which passed the Budget Committee in a bipartisan manner. I strongly support this proposal and commend Mr. COOPER for his leadership on the matter. I am hopeful that the Budget Committee, of which I am the Ranking Member, will seek to permanently enact this provision. I look forward to working with Mr. SPRATT and other distinguished Members of the Committee to accomplish this.
* Finally, this proposal would require the Secretary of the Treasury and the Comptroller General of the GAO to testify before Congress on our fiscal exposures. The Secretary of the Treasury would have to testify on the Financial Report, which is a document that far too few Members of Congress, let alone the public, are aware of. While Members such as Mr. COOPER and Mr. KIRK have done a great job in recent years in starting to build awareness of this document, this proposal would take the next important step.
* The Comptroller General would also have to report to Congress on the full extent of our fiscal exposures on an annual basis. This would go a long way toward ensuring that Members of Congress and the public start paying attention to these daunting figures. Our current Comptroller General, Mr. Walker, has fought vigorously on this matter and has done an excellent job of alerting people to the challenges we face. This would give him a regular forum in which to do so and allow him to continue performing an excellent service to the Nation.
* Before I close, I would like to thank the other lead cosponsors for allowing me to join their effort. This issue is something that Mr. Cooper and Mr. Kirk have worked diligently on for years and I am glad to be a part of the latest version of their bill. Ms. Bachmann also deserves immense credit for drawing on her financial background and striving to become a leader in Congress in this area. She was instrumental in putting together this legislation and ensuring the participation of such a strong bipartisan coalition.
* I am truly hopeful that our fiscal exposures will not continue to go unnoticed and that we can help build congressional support for entitlement reform. The challenges we face are too big to ignore. If we do not level with the American people about the true nature of this problem and seek to address it, we will be jeopardizing the economy and standard of living of future generations.