If you ignore the SS surplus and trust obligations, then the deficit is indeed on $260 Billion. However, compared to past years, the total deficit is second only to year 2003.
See this blog for a detailed analysis:
http://calculatedrisk.blogspot.com/2006/09/fiscal-2006-record-ytd-increase-in_03.html
The federal government is doing no better than before. Their lack of fiscal discipline is disappointing.