Interest payments on the US national debt will eclipse defense spending in 2024, grim new projections show. 

Federal debt is at a historic high, having hit a staggering $34 trillion earlier this year. 

Interest payments on this debt are now the fastest growing part of the federal budget, according to the nonpartisan Congressional Budget Office. 

They jumped above Medicaid last year, and will rise above defense and Medicare later this year. The former is health coverage for people with limited income, and the latter is mostly for over-65s.

It means by the end of 2024, interest payments will be the second largest government expenditure. Only Social Security will be a bigger cost.

Net interest has been exploding over the past few years, with payments nearly doubling from $352 billion in 2021 to $659 billion in 2023. 

In 2024, the federal agency predicts interest will total $870 billion – and surge past $1 trillion annually by 2026. 

As interest rates rise, so too do the federal government’s borrowing costs.

As a share of the economy, total interest on the national debt is forecast to hit 3.1 percent of GDP this year. 

According to bipartisan group the Peterson G. Peterson Foundation, the government spends more than $1.8 billion a day on interest payments alone, which it says is a threat to America’s economic future. 

For years, the US was able to borrow cheaply as interest rates remained at historic lows during the Covid-19 pandemic. 

But as the Federal Reserve has continued to hike rates, borrowing costs have ballooned for Americans – and for the government. 

The central bank has raised interest rates 11 times in a year and a half, bringing the benchmark rate to a 22-year high of between 5.25 and 5.5 percent. 

While the Fed has indicated that it may lower interest rates this year, analysts now expect this will not happen before May at the earliest. 

It comes after legendary hedge fund manager Paul Tudor Jones warned that ‘unsustainable’ government borrowing has led to a ‘debt bomb’ which is on the verge of exploding in the US.

The investor, who has a net worth of $8.1 billion, said that the economy appears strong – but under the surface it is actually on ‘steroids’ that are masking major problems.

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