Why are interest payments considered mandatory spending in the federal budget? a

Question

Why are interest payments considered mandatory spending in the federal budget?

a.They are considered mandatory spending because such payments are fixed at the time of borrowing and cannot be altered.

b.They are considered mandatory spending because the interest rates on federal debt are extremely high, and failing to pay accumulated interest would dramatically increase the total debt.

c.They are considered mandatory spending because not making such payments could endanger the government’s credit rating, which could make it harder to borrow going forward.

d.They are considered mandatory spending because interest payments constitute the largest part of yearly government spending.

e.They are considered mandatory spending because most interest payments go to American households and those citizens depend on the interest payments for their livelihoods.

Explanation / Answer

c.They are considered mandatory spending because not making such payments could endanger the government’s credit rating, which could make it harder to borrow going forward.

Goverment is always in need of funds and interest payment also decreases debt burden.

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