Generational Burden: Who Pays for Today's Deficits?

The OLG model computes a "net lifetime tax rate" for each birth cohort: the ratio of (lifetime taxes paid − lifetime SS benefits received) to lifetime wages earned. Under the baseline (current law), the model shows rising net lifetime tax rates for younger cohorts. This is because: (a) The national debt is being passed to future taxpayers (b) Social Security is projected to face funding shortfalls after 2035 (c) Capital crowding out reduces wages for future workers Run the baseline OLG simulation and report: what is the average net lifetime tax rate for cohorts born 1980-2010 (current workers)? Enter the average net tax rate (as a percentage, e.g., enter 28.5 for 28.5%).

Compare two scenarios: A) Baseline: current-law deficit path (~6% GDP/year) B) Higher deficit: add 2% of GDP more borrowing each year for 10 years In scenario B, the government borrows more now to finance spending (perhaps on infrastructure or social programs). Future taxpayers must service the additional debt. Run both scenarios and report: by how many percentage points does the average net lifetime tax rate increase for cohorts born 2025-2060 in Scenario B vs. Scenario A?