The aggregate deficit through July totaled 973.8 billion dollars, the U.S. Treasury Department reported on Friday.

The level was 11.5 percent lower than the imbalance for the same period of last fiscal year, but still put the country on track for a deficit of over 1 trillion dollars for the fourth consecutive fiscal year.

The Congressional Budget Office (CBO), a non-partisan budgetaryand economic research agency for the U.S. Congress, predicted that the federal government would run a budget deficit of about 1.17 trillion dollars in the current fiscal year, a slight reduction from the 1.3-trillion-dollar budget deficit recorded in the 2011 fiscal year.

Facing growing pressures from fiscal challenges brought about by tax hikes and automatic spending cuts scheduled to kick in early next year, Democrats and Republicans at the Congress are still at odds over how to bring the fiscal policy back to a sustainable path.

U.S. President Barack Obama and Democrats called for a combination of spending cuts and tax hikes for the wealthy. They plan to let Bush-era tax credits expire for families making more than 250,000 dollars a year. Republicans rejected the tax increases on top earners and wanted deeper cuts in social programs.

The GOP-controlled House of Representatives and Democrat-led Senate have passed their proposals respectively before a five- week recess. They are poised for a showdown on the deficit and taxes at the year end.