Is Obama's jobs package vital to save the economy?

President Barack Obama speaks about his proposed American Jobs Act in Raleigh, N.C.

Jeremy Hobson: Diane Swonk, chief economist at Mesirow Financial, who's with us live from Chicago. And Andrew Walker, the economics correspondent for the BBC, who's with me here in the studio in London. Good morning to both of you.

Diane Swonk: Good morning.

Andrew Walker: Good morning.

Hobson: Well Diane, let me start with you. This jobs plan -- so far, its been sitting there for a month, no action yet. How important is it do you think at this point for the U.S. economy that something like this -- that a jobs creation package -- gets passed soon?

Swonk: We're in incredibly fragile territory in the U.S. economy, and at least a portion of the jobs package needs to be passed to avoid a double-dip recession. The lowest hanging fruit is an extension of the payroll tax, because if it's not done, there'll actually be a tax hike in January -- which will further curtail consumption.

Hobson: Andrew Walker, here in London, what do you think? What does the rest of the world want from the U.S. labor market? Does it matter if something gets passed?

Walker: It matters very much just what happens to the U.S. labor market. Though I suppose it's another question -- some people would argue -- whether President Obama's approach is the right one. But for the rest of world, the U.S. is an enormously important export market; the state of its financial markets have all sorts of implications for the rest of the world. And right now, when we've got these terrible problems in Europe, I think something positive coming out of the U.S. is something the rest of the world needs very badly.

Hobson: Well, when you watch Washington get stuck in this stalemate that it's in right now, how does that look to the rest of the world?

Walker: It's a curious thing, because bear in mind -- especially from here in Europe -- we don't have the same kind of constitutional stalemates. Typically, most governments are governments because they have majority support in the legislature. So the kind of standoff you've got between executive and legislative doesn't tend to happen in Europe. We do have other kinds of stalemates, it has to be said.

Eurozone governments, for example, are squabbling rather ineffectually about exactly what to do about the situation in the eurozone. But that's squabbling between different governments, rather than within a constitutional system.

Hobson: Diane Swonk, back to you -- Andrew just brought up the euro debt crisis. As an economist, when you look both of these situations -- stalemate in Washington and a European debt crisis -- which is more of a concern to you for the American economy?

Swonk: Well certainly, a financial crisis in Europe is a major concern for the U.S., although it is stunning to see that Europe, although moving slowly, is at least moving -- and Washington is stuck in gridlock.

Hobson: Diane Swonk, chief economist with Mesirow Financial,
and Andrew Walker, economics correspondent for the BBC -- thanks to both of you.

Walker: Thank you.

Swonk: Thank you.

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