The Congressional Budget Office said Tuesday that it projects a federal budget deficit of $1.35 trillion for fiscal year 2010 unless current policies and law change.

According to the office, the projected deficit would be down from 2009, but still the second largest since World War II, when measured as a share of national GDP.

Total debt is expected to climb to $8.8 trillion, or 60 percent of gross domestic product, by the end of 2010.

“Beyond the 10-year projection period, growth of spending for Medicare, Medicaid and Social Security will speed up from its already rapid rate,” CBO reported. “To keep federal deficits and debt from reaching levels that would substantially harm the economy, lawmakers would have to significantly increase revenues, decrease projected spending or enact some combination of the two.”

On Tuesday, the U.S. Senate rejected an idea backed by President Obama to form a bipartisan panel to develop plans to reduce the deficit.

President Obama is set to announce an upcoming spending freeze on non-discretionary defense spending in tonight’s State of the Union speech, as an effort at incremental progress on the deficit. Both supporters and critics of the move note that the freeze will not address the central factors driving deficit growth.