(Corrects quote in second paragraph of story published Sept. 21.)
Sept. 21 (Bloomberg) -- Australian Treasurer Wayne Swan said “cranks and crazies” in the U.S. Republican Party are threatening economic growth as Congress remains deadlocked on tax increases and spending cuts set to take effect in January.
“Global markets are watching the positioning of hardline elements of the Republican Party for signs that they will dangerously block reasonable attempts at compromise,” Swan said in a speech in Sydney today. “Let’s be blunt and acknowledge the biggest threat to the world’s biggest economy are the cranks and crazies that have taken over a part of the Republican Party.”
U.S. lawmakers are deadlocked over how to resolve the so-called fiscal cliff, the combination of more than $600 billion in automatic tax increases and spending cuts that will go into effect next year if Congress does nothing. Ben S. Bernanke, the chairman of the Federal Reserve, has said the issue is one of the main sources of risk for the U.S. economy.
Republicans led by the anti-tax Tea Party movement wrested control of the U.S. House of Representatives from Democrats in the 2010 mid-term election, picking up 63 seats for their biggest gain in 72 years. The movement’s clout was evident in primary races earlier this year in Indiana and Texas, where establishment-backed Republican officials were defeated by candidates eschewing political compromise.
“With the world watching, it is imperative that the U.S. Congress resolve an agreement to support growth in the short term,” said Swan, who is also deputy prime minister.
Australia’s opposition coalition, leading the governing Labor Party in opinion polls before elections due next year, today criticized Swan’s comments on the Republican Party as a “calculated insult,” the Australian newspaper reported.
“He is showing reckless disregard for the debt burden the U.S. faces,” the newspaper cited Julie Bishop, the opposition foreign affairs spokeswoman, as saying. “It was a calculated insult to the elected representatives of our key ally.”
Prime Minister Julia Gillard defended Swan’s comments when asked by reporters whether they would affect her government’s ability to work with the Republicans if presidential nominee Mitt Romney wins office.
“What happens in the U.S. economy matters to the world economy,” Gillard said today in Sydney. “The treasurer’s been making appropriate comments about potential risks to the global economy.”
Swan’s foray into U.S. politics comes after he depicted New Jersey last month as a down-trodden place where workers get “thrown on the scrap heap of life” -- prompting a backlash from state officials.
“If I could distill the relevance of Bruce Springsteen’s music to Australia it would be this: Don’t let what has happened to the American economy happen here,” Swan said in an Aug. 1 speech in Melbourne. “Don’t let Australia become a down-under version of New Jersey, where the people and the communities whose skills are no longer in demand get thrown on the scrap heap of life.”
Tom Kean, the top Republican in the New Jersey state legislature, hit back at Swan’s comments at the time, saying they were down to “the electoral silly season.”
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