21 Sep 2012

Republicans 'cranks and crazies' worry Swan

11:03 pm on 21 September 2012

Australian Treasurer Wayne Swan has delivered a speech labelling some elements of the United States Republican party as "cranks and crazies".

Mr Swan's speech at the Financial Services Council breakfast in Sydney comes less than two months before the US election, the ABC reports.

His speech referred to political gridlock over spending cuts and tax increases due to kick in early next year, which could tip the US economy back into recession.

"Let's be blunt, the biggest threat to the world's biggest economy are the cranks and crazies that have taken over parts of the Republican Party," he said.

"Despite (US president Barack) Obama's goodwill ... the national interest was held hostage by the rise of the extreme right Tea-Party wing of the Republicans.

"There can be few things more alarming in public policy than a political group which was genuinely prepared to see the government of the United States default on its obligations in order to score a political point."

Mr Swan says global markets are nervously watching hardline elements of the Republicans for signs they will block reasonable attempts to support growth.

"The congressional budget office estimates that currently legislated spending cuts and tax increases amount to a fiscal consolidation worth around 5.1% of GDP in the 2013 calendar year," he said.

"If that occurred, that would tip the US economy back into recession.

"With the world watching, it is imperative that the US congress resolve an agreement to support growth in the short term."