As Congress struggles to decide how to proceed in crafting the economic stimulus bill, it needs to do more than develop a plan to pile trillions more on the national debt. Already, the federal deficit has grown by over half-a-trillion dollars as a result of government funds spent to try to rescue the economy - including money for the first stimulus package, taking over Fannie Mae and Freddie Mac, the TARP rescue for the financial sector, and the costs of insuring failed banks.

The challenge now is to balance the benefits of additional stimulus spending with the risks of additional borrowing. Otherwise, our deficit - already projected to be well more than $1 trillion this year - will grow so large that foreign lenders will no longer want to lend at affordable rates and the financial markets and economy will take another plunge.

It is unfortunate that the government's balance sheet wasn't stronger going into this slump. This is precisely why governments should run surpluses during the good times - so that they can accommodate the extra borrowing needed during periods of economic hardship. Nonetheless, policymakers do need to take active steps to stabilize the economy and borrowing will be part of the picture.

There are three major components to crafting a fiscally responsible stimulus package.

First, the stimulus package must be economically, not politically, motivated. Policies should inject capital into the economy quickly, and they should be temporary. This cannot be seen as an excuse to pass every item on Congress' pent-up wish list.

In crafting a package, it's best to stick to the basics - the types of policies the Congressional Budget Office has found to be the most effective, such as temporary tax cuts targeted to those most likely to spend rather than save the money, expanding unemployment benefits and food stamps, and providing aid to the states.

Yet in its analysis, the CBO found that the bill passed by the House of Representatives would spend $820 billion, but less than two-thirds of the money would make its way into the economy during the next 18 months. Many of the policies, such as those for renewable energy, highway construction and health information technology, would spend most of the money well after the recession is projected to be over.

Moreover, many of the policies are really intended to be permanent, not temporary, as a deficit-financed stimulus package should be. For instance, the tax and education proposals come directly from President Obama's campaign promises. Just as President George W. Bush's temporary tax cuts, slated to expire at the end of the decade, are likely to be made permanent, these policies are not intended to go away, and it is unlikely that they would. It is similarly inconceivable that other parts of the proposal, such as money for enforcing child support or health insurance for unemployed workers, would be abruptly cut off once the economy recovers.

Second, after the recession ends, we need to be willing to repay the money borrowed to finance the stimulus package. The plan should be to borrow the money now, and then repay it over the next decade.

We could pay for the tax cuts by deep reductions in corporate welfare. The costs of expanding food stamps and unemployment insurance could be paid for by reducing costly farm subsidies. Spending on health care could be paid for by reducing future payments for over-treatment, elective procedures, and by penalizing providers who do not modernize their information technology systems. The more than $100 billion dollars that will go to the states could be offset by reducing the state and local tax deduction, which is an ongoing subsidy from the federal government to the states. And finally, new "green" investments and infrastructure spending could be paid for by increasing the national gas tax - a necessary part of any comprehensive energy and environment policy anyway.

The third step will be to, once and for all, face the nation's long-term budget problems. We have known for years that something must be done to fix the country's long-term entitlements problems. This is the wake-up call that that something should be done sooner rather than later. Congress and the president should agree to develop a bipartisan fix for Social Security over the next year. Changes such as an increase in the retirement age and benefit reductions for well-off retirees could be phased in gradually. And we will need to do the first round of health care reform - controlling costs, improving the price consciousness of consumers, and reforming the tax treatment of employer-provided health care to help reduce out-of-control health care costs.

Spending upwards of $1 trillion on the stimulus package is the simple part - and even that is proving not to be so easy. The trickier question is how to make sure the economy isn't overwhelmed by all the new debt we are incurring, which could easily cause the next economic crisis.

The country must now enter into a delicate two-part strategy of both stabilizing the economy in the short-run and addressing the tremendous fiscal imbalances we face. Congress cannot afford to forget the second part of this strategy.