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In my last column, I argued that all infrastructure investment is not the same. If we are to embark on massive investments to stimulate the economy, we should do so with an eye toward producing benefits in the long term. And I argued that education is one such investment.

This assertion generated a lot of pushback from people who feel passionately that any stimulus package should focus on creating jobs right now. Clearly that's important, but it is also not a long-term fix, particularly when the jobs to be created are not likely to be the high-quality, long-term career positions that make for a successful economy. From this perspective, investing in human capital is the way to go. This is not just opinion--there is a lot that we know about the returns to investing in human capital, and we know more and more all the time about which investments yield good returns.

The most essential reading on this topic is The Race Between Education and Technology, by Claudia Golden and Lawrence Katz. Goldin and Katz give a broad historical view of the role of education in economic growth in the U.S. They make the case that, after a century of leading the world in supplying the educated workers needed to serve technology, the U.S. has fallen behind in education. There is other important research by James Heckman of the University of Chicago and Arthur Rolnick of the Federal Reserve Bank of Minnesota on the returns to early childhood education.

Any discussion of investments in education with the goal of preparing the workforce of the future needs to begin in early childhood. In the first five years of life, children undergo tremendous development. If children receive support for growth in language, development of motor skills, social skills and emotional support, they are more likely to succeed in school subsequently and to later contribute to society. Absent that kind of early development, children are more likely to drop out of school, commit crimes and require support from the welfare system. These are the costs that society bears.

Estimates are that early childhood education programs that are focused on children at risk produce returns of as much as 7%-16%, a large portion of which are social returns. This is a good investment. Some of these returns will be lost if the K-12 education system is broken and some of the disappointing results on the benefits of Head Start programs are due to deficiencies in the school systems that the children encounter subsequently. Clearly more has to be done at this level.

Education, as we all know, is a cumulative process. Thus, calling for a highly educated workforce implies, almost by definition, that individuals receive both early childhood development and a solid education from kindergarten on up. Programs like Head Start are important, but without a strong K-12 education that builds upon those accomplishments, students will not be ready to move on to college education.

Unfortunately, as Goldin and Katz document, we have faltered--and even fallen behind--in K-12 education by many measures. One example is that the secondary school graduation rate has declined significantly in the last 25 years.

President-elect Barack Obama is developing a plan to create or preserve 2.5 million jobs over the next two years by spending billions of dollars to rebuild roads and bridges, modernize public schools, and construct wind farms and other alternative sources of energy.

The plan, which Obama announced yesterday during the weekly Democratic radio address, is more expansive -- and undoubtedly more expensive -- than anything proposed so far to revive the nation's deteriorating economy. Obama said the darkening economic outlook demands that Washington act "swiftly and boldly" to diminish the risk that the nation "could lose millions of jobs next year."

"The news this week has only reinforced the fact that we are facing an economic crisis of historic proportions," Obama said, citing chaotic financial markets, rising jobless claims and the specter of a "deflationary spiral that could increase our massive debt even further." He provided few details and no price tag, but said his economic team is working on "a plan big enough to meet the challenges we face that I intend to sign soon after taking office."

While cast as a response to a rapidly worsening crisis, the plan could enable Obama to shift massive sums to domestic priorities that Democrats say have long been neglected, such as health care and education. It also could provide seed money to reshape major U.S. industries, hastening the production of wind and solar energy and fuel-efficient cars, for example. Obama said the plan would be "a down payment on the type of reform my administration will bring to Washington."

Obama has scheduled his second formal news conference since the election for tomorrow to introduce his economic team, including Federal Bank of New York President Timothy F. Geithner, Obama's nominee for Treasury secretary. According to Democratic sources, Harvard economist Lawrence Summers, a Clinton administration Treasury chief, will be named director of the National Economic Council. In this capacity, Summers will coordinate the Obama administration's overall economic policy.

Obama's advisers are coordinating with Democrats in Congress to craft a proposal intended to spur economic activity. Congressional leaders have said they hope to pass it shortly after the new Congress convenes next year and have it on Obama's desk soon after he takes office on Jan. 20.

Obama's address echoed many of the same ideas Democrats on Capitol Hill have been advocating for nearly a year.

Obama said his plan would launch "a two-year nationwide effort to jump-start job creation in America and lay the foundation for a strong and growing economy. We'll put people back to work rebuilding our crumbling roads and bridges, modernizing schools that are failing our children, and building wind farms and solar panels," as well as producing fuel-efficient cars.

"These aren't just steps to pull ourselves out of this immediate crisis; these are long-term investments in our economic future that have been ignored for far too long," he said.

Economists have called on the federal government to spend at least $150 billion and as much as $500 billion to ease the effects of what is expected to be the most painful and prolonged recession since World War II. A stimulus package signed by President Bush in February cost $168 billion.

House Democrats have been talking about a new package worth at least $150 billion, and possibly much more. During the presidential campaign, Obama proposed a two-year, $175 billion stimulus package with money for cash-strapped state governments and infrastructure projects as well as a $1,000 tax credit for working families.

The campaign did not release an estimate of the number of jobs that his latest proposal would create. But congressional aides who have been involved in developing stimulus proposals said that any plan to create 2.5 million jobs is likely to be significantly larger -- probably well over $200 billion, or between 1 and 2 percent of the gross domestic product.