Pimco's El-Erian: Next President Must Be Ready to Compromise

Thursday, 12 Jan 2012 07:47 AM

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Whoever wins the presidential election in November must move to the center and finally solve serious problems facing the U.S. economy in a pragmatic fashion, says Mohamed El-Erian, CEO of Pimco, the world's largest bond fund.

President Barack Obama might drift toward the left to appease those identifying with the Occupy Wall Street crowd this campaign season, while the GOP nominee will drift to the right to cater to Tea Party voters.

The winner needs to rush closer to the center and stop the finger-pointing and bickering that has defined American politics as of late.
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"Whoever wins the November elections will have to lead and unite the nation in order to strike the correct balance in three key economic areas — and it is possible to do so, although there are no guarantees: between tax and spending reform, between immediate stimulus and medium-term debt and deficit reduction, and between incentives for businesses and stronger social safety nets," El-Erian writes in a Huffington Post op-ed piece.

The winner must also tackle tough reforms to entitlement programs like Social Security and Medicare to avoid displacing one generation's debt on the shoulders of another.

"The current generation of baby boomers possesses a range of tax breaks and historical contracts that expanded (and seemed to make sense) during America's 'great age' of leverage, debt and credit entitlement," El-Erian writes.

"However, in today's environment of low growth and de-levering, they can only be sustained by fairer burden sharing within this generation. If this shared responsibility does not materialize, the country will end up placing an even greater burden on other generations."

Former Massachusetts Governor Mitt Romney trails Obama in the polls, but not by much.

Romney would get 43 percent of the votes compared to the Obama's 48 percent, according to a Reuters/Ipsos survey.

Obama's ratings have improved with the economy, and Romney will go up the longer he remains the Republican frontrunner.

"Now that Mitt Romney looks like he's got a clearer path to the Republican nomination, his standing is improved as well, so this race is tightening between Romney and Obama," says Ipsos pollster Chris Jackson, according to Reuters.

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