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.
The mature people of America have to rise above the petty politics, and blaze the trail forward.
He is 2 1/2 years late to the actual issue with our economy, and he is also wrong with his "ideas".
Just get out of American innovators way and they will bring us back.
A REAL leader rallies people behind painful truths. A pathetically weak leader WHIPS OUT THE CREDIT CARD, spends millions into debt to make everything appear rosy and then splits.
Well, yes in a manner of speaking. It had an impact on the stock market to the tune of "Down 303 Points".
For the sake of my 401k, I sincerely hope he doesn't give another in 11 days as he threatens, er, promises.
actually the stock market went down due to concerns about Europe
EPIC EPIC FAIL
Comes the moment, comes the man--today out politicians are cookie cutter unthinkable and unable to understand that we in America are at a change point. No one now running for office will help the Average American or give America a future. The man is an unknown and the time has come....Not from the best schools, not mentored or even in any party, the man and change have arrived.
This "plan", it's pretty laughable. Obama continues to support all sorts of job killing free trade agreements while simultaneoÂusly handing out bags of peanuts to the unemployed and the minimum wage worker. Of course his jobs adviser (the CEO of GE) just shipped a whole manufacturÂing plant over to China - so you can imagine what his advice is.
Editors needed STAT!
people are without jobs, the end result is the same as bank closing. There will be wide spread poverty and despondency. Creating employment for the public by government is just as vital and just as urgent.
In a recession the government must spend effectively to stimulate demand... Keynes elegantly proved it.
The neoliberals are trying desperately to disprove him, but they can't.
Foreign wars are Keynesianism big capital actually likes.
What neoliberals are trying to convince the masses about is the superflousness of government, except for the army and the police.
This is Ayn Rand's thought, but she had no notion of economics. Embittered - and rightly so - by her Soviet experience, she tried to apply certain notions in an American context, without noticing that the political tradition of the USA was very different from what she left behind in the Soviet Union.
The neoliberals want a government even more beholden to big business than the present one.
As any excess, this is bad even for the neoliberals's own good.
But there is a human tendency to carry ideologies to excess, unfortunately.
Only actions count when it comes to politicians.
There are countless individuals whose words are meaningful. Unfortunately, politicians are among them.
I await what lies, misinformation, distortions will flow from the DC cesspool to poison the airwaves about the American Jobs Act. It has started already for this morning on WashJournal C-Span a republican caller said he wouldn't vote for the president because last night Obama said he wanted to cut Social Security. Lucky the democratic congressman was taking the questions and responded that the president DID NOT say he wanted to cut social security. Now this caller got that misinformation from somebody, somewhere on the airwaves.
What is needed is more responsible media folks, economists out there debunking the lies being told to confuse the people for political gain. A host of folks are being paid big bucks to promote dissension, confusion which has led and still leading to lost of confidence in govt, in the economy. We need more honesty, not more obstructionist political games.
I'm not at all surprised that words of wisdom comes from those of us that have spent a little more time on this planet. Thank you for telling it like it is!
But of course Obama will never address the real problems.
Jeffrey, you know, the CEO of GE not only won’t pay taxes, none, and is closing plants here in the US to send the jobs to the Chinese (12,000). What hypocrisy.