That total would surpass the previous annual record of $1.4 trillion set in 2009, when the government was spending heavily to lift the country out of the recession caused by the 2008 financial crisis.
The June deficit was driven higher by spending on various government relief programmes such as an extra $600 per week in expanded unemployment benefits and a Paycheck Protection Program that provided support to businesses to keep workers on their payrolls.
The report showed that the cost of the Paycheck Protection Program in June was $511 billion. That reflected a charge to the government for all the bank loans made under the programme even though the government will not actually have to pay out funds until the banks determine whether the businesses met the criteria for having the loans forgiven. Those requirements include spending at least 60 per cent of the loan amount on worker pay with the other 40 per cent going to overhead costs such as rent and utilities.
Another reason for the surge in the June deficit was the government's decision to delay tax payments this year until July 15. That decision means that quarterly payments made by individual taxpayers and corporations will not be due until July 15 this year rather than June.
So far this budget year, revenues total $2.26 trillion, down 13.4 per cent from the same period last year, while spending totals $5 trillion, up 49.1 per cent from a year ago.
The CBO estimate of a $3.7 trillion deficit for this year could go higher, depending on the course of the economy.
The country fell into a deep recession in February, ending a record long expansion of nearly 11 years. The Trump administration is predicting that the economy will come roaring back in the second half of this year, but many private forecasters are concerned that a resurgence of virus cases could make consumers too fearful to resume spending, which drives 70 per cent of the economy.
Congress, which has already approved more than $3 trillion in a series of rescue packages, is scheduled to debate another support effort when it returns from recess on July 20. Democrats are pushing for an extension of the expanded unemployment benefits, which will soon run out.
Nancy Vanden Houten, senior economist at Oxford Economics, said she was expecting that lawmakers would end up compromising on a new economic support package that would fall somewhere between a $3.5 trillion measure passed by the House but not taken up by the Senate and what is shaping up to be an opening offer by Senate Republicans for a package of about $1.5 trillion.
"The risk is that the deficit will be larger due to additional stimulus but, given the congressional timetable, the impact of the next package will likely be skewed to fiscal 2021, which starts on October 1," she said.