NEW YORK (CNNMoney.com) -- The budget deficit will jump by $246 billion to $407 billion, according to an updated estimate by the Congressional Budget Office released Tuesday.



Last year, the budget deficit was $161 billion. The government's budget year ends Sept. 30.



The agency attributes the jump to "a substantial increase in spending and a halt in the growth of tax revenues."



That drop in revenue is mainly attributable to the rebates provided to tax filers from the economic stimulus law Congress passed earlier this year. The increase in spending is partly attributable to spending "to cover the insured deposits of insolvent financial institutions," the agency said.



To date, 11 banks have been seized by the FDIC this year - not a high number historically, but higher than it's been in recent years - and that number is expected to grow in the coming months.



The CBO said it expected the deficit to exceed $400 billion - or 3% of gross domestic product - for each of the next two years if current policies remain in place. It also forecast several more months of "very slow" economic growth.



The agency's latest estimates do not reflect the Treasury announcement this weekend that the government would temporarily takeover Fannie Mae and Freddie Mac, the two government-sponsored enterprises that form the backbone of the mortgage market.