An information technology think tank is urging Congress to devote $30 billion toward the IT industry, saying such a move will create or retain nearly 1 million jobs, more than half of them at small businesses.

The economy may be in recession but there is federal money to be had, with President-elect Barack Obama proposing a two-year, $775 billion economic stimulus plan. The nonprofit Information Technology and Innovation Foundation is urging the government to devote a large portion of that money to IT in a report to be released Wednesday titled The Digital Road to Recovery: A Stimulus Plan to Create Jobs, Boost Productivity and Revitalize America. 

“Although projects to improve the country’s traditional physical infrastructure (e.g., roads, bridges, sewer systems) are necessary and important, investments in certain parts of our national information technology (IT) infrastructure—America’s digital infrastructure—will have a greater positive impact on jobs, productivity, and innovation,” ITIF president and report lead author Robert Atkinson writes.

Pumping $30 billion into American’s IT infrastructure this year would create 949,000 jobs, 525,000 of which would be in businesses with fewer than 500 employees, ITIF says. The report’s proposed spending would be divided evenly in three areas: broadband networks, health IT and a smart power grid.

“Investments in IT infrastructure should not be minimized out of concern that the projects will take too long to begin to have an immediate impact on the U.S. economy,” Atkinson writes. “If the stimulus measures are designed properly, they can quickly spur a large number of investments—from deploying more and faster broadband networks to switching to electronic health records (EHRs) to rolling out advanced energy metering technologies (smart meters)—that are ‘shovel-ready.’”

ITIF used a liberal definition of jobs created by IT investments in its report. In addition to jobs created directly by new spending, there would also be jobs created in businesses that supply materials necessary materials for infrastructure upgrades – such as circuit boards for routers.

The report also counts some jobs having nothing to do with IT, such as those in the restaurant and retail industries, because these jobs would theoretically be created when newly employed IT workers start spending their paychecks. Much of the job creation would also come in the form of the “network effect,” in which investments in a sector like health IT spur developments of new products and services.