President-elect Barack Obama today laid out the broad lines of a massive $775 billion economic stimulus plan to drag American out of recession.

Mr Obama said that the package included making good on a pre-election promise to ensure that 95 per cent of working families get a $1,000 tax cut "to get people spending again".

In a speech at the George Mason University in Fairfax, Virginia, Mr Obama also pledged to double US production of alternative energy in three years, to modernise 75 per cent of federal buildings and improve the energy efficiency of two million American homes, "saving consumers and taxpayers billions on our energy bills".

Mr Obama, who takes over at the White House on January 20, said that he was confident that the plan would save or create three million jobs in three years.

Twelve days before his inauguration as president, in a speech at George Mason University in Fairfax, Virginia, Mr Obama warned that America was beginning 2009 "in the midst of a crisis unlike any we have ever seen in our lifetime".

"I don’t believe it’s too late to change course," he added," but it will be if we don’t take dramatic action as soon as possible. If nothing is done, this recession could linger for years. The unemployment rate could reach double digits."

Mr Obama is taking over an economy in recession and faces a budget deficit expected to exceed $1 trillion for the year.

No president has faced such a stark challenge since Franklin D Roosevelt, who helped pull American out of the Great Depression, and Mr Obama's economic recovery plan has been compared with Roosevelt's New Deal plan of public works.

The Obama plan has been costed at around $775 billion, 40 per cent of which will be spent on tax cuts.

Mr Obama also promised to "retrofit America for a global economy", spending billions on improving broadband connections and rebuilding school classrooms, laboratories and libraries so children from Boston could compete with children from Beijing for the high-tech jobs of the future.

The President-elect asked the US Congress to work "day and night" to swiftly pass his plan, but he knows that sky-rocketing deficits may make the proposal a tough sell with many on Capitol Hill who are reluctant to ramp up debt in the midst of a recession.

Mr Obama and his advisers have been talking with key figures in the Democratic-led Congress to craft the two-year stimulus plan seeking bipartisan support for the plan.

He hopes to secure passage of the economic plan by mid-February. "For every day we wait or point fingers or drag our feet, more Americans will lose their jobs," he said. "More families will lose their savings."

A bleak report his week on the US budget outlook added to the challenge faced by Mr Obama in selling his plan. The budget deficit for the current 2009 fiscal year ending September 30 is expected to nearly triple to around $1.2 trillion, according to the Congressional Budget Office.

A deficit in that range would be about 8.3 per cent of gross domestic product, shattering the previous post-war record of 6 per cent hit in 1983.

Mr Obama acknowledged this week the country could face trillion-dollar annual deficits for years to come, but he said his "recovery and reinvestment" plan would focus on the private sector rather than government projects so that when the economy recovers, the deficit will start to reduce.

He also promised that the money would be spent with transparency, so that taxpayers could hold Washington accountable. He also said that he would resist the demands of special interest groups in Congress to ensure the package was "free from earmarks and pet projects".

Times Recommends

• Should Knox’s trial even have reached the courtroom?
• 'Was it real?' The US bailout nightmare
• Iranian opposition plays the long game