(Answered) 4.) Explain why interest payments by the federal gov-ernment would still be a large share of…

➤ Why does the existing debt stock matter more than current deficits?
The size and composition of the existing debt stock determine current interest costs. Interest outlays equal the outstanding principal multiplied by prevailing interest rates (roughly r × D). Current deficits affect future debt levels, but today’s payments reflect past borrowing, the debt’s maturity profile, and which securities must be rolled over or refinanced.