"Congress is faced with a difficult choice. On the one hand, the budget deficit is large. On the other hand, if we attempt to offset the increased spending by raising taxes or cutting spending in other areas, each will contract the economy further, which is something we do not want to do. Given all of the contraction forces acting on the economy, we must stimulate demand," Wang said. "Therefore, at least for the next year and a half, perhaps longer, we must tolerate a very large budget deficit."

Now typically when a nation has a large budget deficit, its currency falls in value and interest rates rise. Not so with the United States, Wang says, so far.

The reason? The global financial crisis has produced a flight-to-safety by institutional investors, who are piling in to U.S. Treasuries, which has lowered interest rates on U.S. debt. As a result, the United States should be able to finance at least the first, additional $1 trillion in debt for the rescue for about only $40 billion per year, a modest sum, relatively speaking, Wang said.

"As an analogy, think of it as a 4% loan by a business to increase its productive capacity," Wang said. "That's not too bad. But like the business, that increased investment as to work, yield increased productivity and earnings, to be a successful investment."

Meanwhile, the prospect of interest rate cuts by the European Central Bank and Bank of England to stimulate economies in Europe has prompted currency traders to push the dollar higher, despite the massive increase in U.S. debt. The dollar rose about 1 cent and 1.75 cents to $1.3301 and $1.7139 versus the euro and British pound, respectively, in mid-day Monday trading.

Still, despite the U.S.'s 'reserve currency advantage,' longer term the United States has to balance its budget, Wang said. "A balanced budget will help the dollar rise and increase the attractiveness of U.S investments," he said. "It also signals to the world that the U.S. can fund its own programs and services, which is the goal of every nation."

Federal Budget / Economic Analysis: The budget deficit will be allowed to rise, for now, for the reasons economist Wang stated. However, long-term the U.S. must 'get the lines to move closer together,' and that invariably means a tax increase, with selected spending cuts. That should be the first order of business for the new Congress, after the U.S. economy begins to recover.