The Federal Reserve can no longer support the economy by itself, and the rest of the government must step in to lend a hand, says Mohamed El-Erian, Pimco's outgoing CEO.

Speaking at a conference in New York City, he said the Fed has done all it can, and that's why it is tapering its quantitative easing, Business Insider reports.

"The reason why you're seeing this pivot of the Fed, the costs and risks are starting to outweigh the benefit," El-Erian said. "It has certainly bought the system time, but it hasn't done so in a costless manner."

Editor’s Note: 38 Trades That Could Turn $1,000 Into $49,000

And this is where the rest of Washington must come in, El-Erian says. Political officials must stop creating "pot holes" to growth, he said.

"We should realize the Fed cannot deliver great outcomes for the economy without help," he said. "Either they're going to get help from other agencies in DC that are currently paralyzed or our future is going to be less bright."

He warned that the U.S. was in danger of “becoming Japan” if Congress doesn’t act to spark growth, Barron’s reported.

“The Fed has the willingness to help, but it doesn’t have the tools,” he said. “But with a polarized Congress it’s impossible to solve the problems.”

Among the most important issues for policymakers and the rest of society to address are income inequality, wealth inequality, and inequality of opportunity—the "trio of inequality," El-Erian said.

Not everyone sees income inequality as a huge issue.

For example, Bud Konheim, CEO of luxury-fashion company Nicole Miller, says the 99 percent should stop complaining about their financial situation.

Most of the world would view them as wealthy, he tells CNBC. "We've got a country that the poverty level is wealth in 99 percent of the rest of the world," he said.

Meanwhile, unemployment and income inequality are closely linked and perhaps even the same issue, argues New York Times columnist Paul Krugman.

Pundits think Americans don't care about income inequality. That's a myth, Krugman says, pointing to a new Pew Research Center/USA Today poll that reports most Americans support government action to reduce inequality.

"And this is true even though most Americans don't realize just how unequally wealth really is distributed."

Editor’s Note: 38 Trades That Could Turn $1,000 Into $49,000

Related Stories:

• Former Reagan Adviser David Malpass: Big Government Makes Income Inequality Worse
• Morici: What President Obama Doesn't Get About Inequality