The Congressional Budget Office is estimating that the federal budget deficit will hit $1.5 trillion this year, another new record.
The non-partisan budget agency is also predicting that next year's budget deficit will drop to $1.1 trillion.
The new report comes a day after President Obama pledged to work with congressional Republicans to reduce budget deficits and accumulated federal debt.
It also comes as Congress soon decides on raising the federal government's $14.3 trillion debt ceiling, a move some Republicans are resisting unless it is accompanied by major spending cuts from the administration.
The Associated Press notes that the higher deficit estimate reflects "bipartisan legislation passed in December that extended Bush-era tax cuts, unemployment benefits for the long-term jobless and provided a 2 per cent payroll tax cut this year. That measure added almost $400 billion to this year's deficit, the CBO says."
It is a record deficit in dollar terms, and almost equals the 10% of GDP overspend recorded by Washington in 2009 at the depth of the recession.
The Congressional Budget Office (CBO) revised up an earlier deficit estimate of $1.07tn after President Obama agreed a new stimulus package with Congress.
That package extended Bush-era tax cuts and prolonged unemployment benefits.
"The United States faces daunting economic and budgetary challenges," said the CBO in the introduction to its latest budget outlook report.