President-elect Barack Obama (center) and his economic team are working with congressional leaders on legislation aimed at reviving a moribund U.S. economy and creating jobs. Enactment of the stimulus package shortly after Obama takes office on January 20 is the goal.

Washington — A well-designed economic stimulus plan can reduce the severity of the recession in the United States and lay the groundwork for sustained economic growth in the near future, according to private-sector economists.

President-elect Barack Obama has asked his economic team to work with congressional leaders on legislation aimed at reviving a moribund U.S. economy and creating jobs.

As Democratic leaders in Congress hurry to ready a stimulus measure for Obama’s signature shortly after the January 20, 2009, inauguration, economic news is growing bleaker. The U.S. economy is in recession, and job losses have grown significantly.

Most economists agree on the need for a massive economic stimulus. In a November 19 letter to congressional leaders, nearly 400 private-sector economists, including several Nobel laureates, called for “a fast and effective” response to the economic slump.

But the magnitude and composition of the stimulus package are a matter of debate.

According to economists, for the package to have a significant effect, it should total somewhere between $400 billion and $600 billion, or between 2.5 percent and 4 percent of gross domestic product (GDP), the measure of all final goods and services produced over a specified period of time.

Those ranges are also favored by congressional leaders, according to news reports.

Morris Goldstein, a senior scholar at the Peterson Institute for International Economics, said any stimulus plan should make good use of government spending — particularly, it should create jobs. Many economists say a plan should include aid to struggling state and local governments, an extension of unemployment insurance and other social benefits for workers and funds for infrastructure projects. Other proposals range from a payroll-tax holiday to the elimination of all corporate taxes.

Obama emphasizes infrastructure investment as the most useful way of lifting the country out of the economic slump.

“We need to act with the urgency this moment demands to save or create at least 2.5 million jobs so that the nearly 2 million Americans who’ve lost them know that they have a future,” the president-elect said.

Another Peterson scholar, Simon Johnson, said that, thanks to low prices of oil and raw materials, “value for money” in job creation through infrastructure spending would be particularly high.

Goldstein said stimulus spending by the government will work if the money reaches the economy in the first half of 2009, when the economy is likely to be weakest.

State governors told Obama that states have road, bridge and school projects worth $136 billion that can be started within six months. The U.S. Conference of Mayors, which lobbies in Washington on behalf of cities with 30,000 or more residents, has mapped out $73 billion worth of similar projects in cities that it says could create 850,000 jobs.

But the president-elect said the infrastructure investment also should lay the groundwork for long-term economic growth and give an initial boost to energy, health care and other broad reforms he promoted during his election campaign. He cited improving the nation’s power grid, making public buildings energy-efficient, providing hospitals with electronic medical records and extending high-speed Internet to underserved areas as examples of such investment.

Some doubt the short-term stimulative effect of infrastructure projects because it takes substantial time for funds to flow to builders and contractors and into the broader economy. John Makin, a scholar at the American Enterprise Institute, a policy research group, writes in a recent article that “cost-effective implementation of such measures requires time, while hasty implementation entails waste of scarce resources.”

But Mark Zandi of Moody’s Economy.com, a research and consulting service, argues that the economic problems are likely to last long enough for the economy to benefit from infrastructure investment.

Congressional Republicans often oppose new spending on the grounds it would increase the national debt and federal budget deficit, which reached $455 billion for fiscal year 2008 in September, around 3 percent of GDP.

Obama said that economic recovery will take precedence over deficit concerns when he takes office. Comparing the situation to a medical emergency, he said: “We have to provide a blood infusion to the patient right now to make sure the patient is stabilized.” Nevertheless, Obama pledged to conduct a thorough budget review to eliminate unnecessary or wasteful spending.

Democratic leaders in Congress largely agree with Obama’s stimulus priorities. Speaker of the House of Representatives Nancy Pelosi said that “Congress is prepared to hit the ground running next year and to help President Obama pass his plan.” Rebuilding infrastructure and creating green jobs, she added, will be “the first order of business” for the new Congress.

People close to the Obama’s transition team caution against exaggerated expectations related to the stimulus plan. The plan would not be enough to turn the economy around quickly, they say, but it could make the recession somewhat less severe.

More information about the pros and cons of different economic stimulus efforts is available on the Web site of the Senate Budget Committee.