Judging from President Obama's impactful speech this evening, the administration has at long last recognized the severity of America's unemployment crisis and the need for a comprehensive policy response.
The program is a credible attempt to address structural obstacles that undermine economic growth and employment. Its effectiveness, however, is hostage to two factors that will become clearer over the next few days.
Let us start with the good news. After a painful and, for many, inexplicable delay, the Administration is finally shifting from an ineffectual series of ad hoc measures to a comprehensive program that targets key impediments to job creation.
The emphasis is rightly on employment incentives, labor market reforms, infrastructure, and improving the functioning of the mortgage market.
There are even efforts, albeit even more limited in nature, to bypass clogged credit pipes, alleviate pressures facing our schools, and reduce bureaucracy. And there is a token attempt to provide more summer jobs for teenagers.
I suspect that many would agree with me that, having finally identified the key areas, the President should have been much bolder upfront -- proposing deeper, more ambitious and more detailed structural reforms.
Yet he deserves the benefit of the doubt as he did point to the possibility of reinforcing the program over time.
Now, for the bad news. The effectiveness of this program is far from guaranteed as two big -- and critical issues -- are outstanding.
First, we have to wait until next week for the fiscal component of the program. Specifically, the cost of today's announcements needs to be offset over the medium-term by credible reforms to both taxes and budgetary spending. Second, it is not clear whether this inherently centrist program will succeed in sufficiently bringing together a highly polarized congress.
Democrats and Republicans now have a choice. They can either coalesce around the President's program, drawing comfort from individual elements that appeal to them; or they can hold out for more and, in the process, turn the pursuit of their personal best into an enemy of the public good.
At long last, President Obama did enough this evening to upgrade the quality of the nation's economic debate. He presented a credible program that is focused on the right structural areas. Now he must strengthen it and complement it with a sensible fiscal component; and Congress must discuss it in a cooperative and constructive manner.
A lot is at stake, especially for those that have been jobless for too long but also for American society as a whole. Let us hope that Washington is, collectively, able and willing to follow through. If it does, tonight's speech could well mark the initiation of America's economic Sputnik moment.
Mohamed El-Erian is chief executive officer and co-chief investment officer of Pacific Investment Management Co.
This post originally appeared at CNBC.com.