WARREN, Mich., July 14 -- President Obama came to this economically struggling state Tuesday with a sobering message about its vanishing jobs and a promise of renewal through a new federal investment in community colleges.

But that message was up against rising unemployment -- 14 percent -- and rising frustration. A Detroit newspaper welcomed Obama to the state with a scathing editorial, calling the administration's stimulus package a "failed experiment."

Obama refused to concede that point during his speech at Macomb Community College, where he said part of the answer to recovery is also in a new focus on community colleges. His proposed American Graduation Initiative would pump $12 billion into community colleges and add 5 million new graduates by 2020. The program, he said, would offer training to millions of students who cannot afford four-year universities and opportunity to older workers who need new skills.

"The hard truth is that some of the jobs that have been lost in the auto industry and elsewhere won't be coming back," Obama said. "If you haven't lost a job, chances are you know somebody who has: a family member, a neighbor, a friend, a co-worker."

Education is the way forward, the president told his audience in this Detroit suburb.

"Time and again, when we have placed our bet for the future on education, we have prospered as a result -- by tapping the incredible innovative and generative potential of a skilled American workforce," the president said.

But that message was up against rising unemployment -- 14 percent -- and rising frustration. A Detroit newspaper welcomed Obama to the state with a scathing editorial, calling the administration's stimulus package a "failed experiment."

Obama refused to concede that point during his speech at Macomb Community College, where he said part of the answer to recovery is also in a new focus on community colleges. His proposed American Graduation Initiative would pump $12 billion into community colleges and add 5 million new graduates by 2020. The program, he said, would offer training to millions of students who cannot afford four-year universities and opportunity to older workers who need new skills.

"The hard truth is that some of the jobs that have been lost in the auto industry and elsewhere won't be coming back," Obama said. "If you haven't lost a job, chances are you know somebody who has: a family member, a neighbor, a friend, a co-worker."

Education is the way forward, the president told his audience in this Detroit suburb.

"Time and again, when we have placed our bet for the future on education, we have prospered as a result -- by tapping the incredible innovative and generative potential of a skilled American workforce," the president said.

The heart of the program, White House officials said, is the grants, which will require colleges to compete by designing innovative new programs or revamping their existing curricula. The grants are similar to the "Race to the Top" funding that Education Secretary Arne Duncan has proposed for the K-12 school systems.

"We're going to take a careful look at how well these things work, and only the ones that demonstrate results will receive continued funding," said James Kvaal, a special assistant to the president for economic policy.

Administration officials said the construction money would be used to kick off capital fundraising campaigns at colleges, sparking billions more to repair aging and dilapidated buildings. The money for new courses would be used to develop Internet-based lessons that could be used by schools all over the country to reach more students.

Obama aides said the money for the program would come from savings generated by changing the way the college loans are made and will be submitted with the Pell Grant changes in the next several months. If passed, they said the money would start flowing next year.

The funds would support what White House officials say would be a 40 percent to 50 percent increase in the number of people who graduate from a community college or go on to a four-year university. Currently, about 1 million students graduate from community colleges each year.

George Boggs, president of the American Association of Community Colleges, said Obama's proposal would be the largest federal investment in community college history.

But he said the money cannot come soon enough to deal with the most pressing problems: a lack of money, staff and classroom space to serve students this fall. Many colleges have already mapped out their plans for the fall semester.

if ( show_doubleclick_ad && ( adTemplate & INLINE_ARTICLE_AD ) == INLINE_ARTICLE_AD && inlineAdGraf ) { placeAd('ARTICLE',commercialNode,20,'inline=y;',true) ; }

There is a question, too, of whether colleges will be permitted to use the new federal funds for their most urgent needs in faculty and teaching space.

"It's going to be very focused money," Boggs said -- with the focus more on building capacity in the system over the long term than plugging holes in this year's budget.

Surging enrollment and dwindling funds heading into the fall semester are forcing Washington area community colleges to face the prospect of turning students away.

Montgomery College projects record enrollment exceeding 60,000 in fall, a 5 percent increase, with a flat operating budget of $215 million. Northern Virginia Community College has had its funding cut 10 percent in two years but has seen enrollment spike 12 percent, with another 11 percent bump expected in fall.

"We're just being swamped at the very moment that our capacity is being called into question," said Bob Templin, the Northern Virginia college's president, adding that Obama's proposed funds "changes the equation substantially."

Templin said he will immediately begin leasing classroom space and hiring faculty to one-year teaching contracts, spending $1 million to $2 million in anticipated federal money.

Some critics of the president's economic proposals predict the cash infusion will do little to spark the economic recovery that places like Michigan are demanding.

"More and more money has been pushed into higher education, both the schools' and the students', for decades," said Neal McCluskey, an education scholar at the Cato Institute in the District. "Most of what that's translated into is waste. So you've seen tuitions skyrocket, you've seen these building arms races on campus."

McCluskey said community college training is a costly and ineffective proxy for on-the-job training, which is what many high-growth careers require.

"Just looking at the statistics, the data, it seems that we don't want to push more people into community colleges," he said.