Mr Swan identified the biggest threat to a full resurgence in the United States economy as ''the cranks and crazies that have taken over a part of the Republican Party'' and preventing Congress resolving its budget problem, the so-called ''fiscal cliff''. ''With the world watching, it is imperative that the US Congress resolve an agreement to support growth in the short term," he said. ''In a throwback to a year ago, global markets are nervously watching the positioning of hardline elements of the Republican Party for signs that they will dangerously block reasonable attempts at compromise. "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." After the speech, Mr Swan told reporters the federal opposition were also guilty of ''stooping'' to Tea Party politics.

''I know there are people who will go out there like [Opposition Leader] Tony Abbott and talk our economy down and behave in a Tea Party fashion,'' he said. ''The fact is the fundamentals in the Australian economy are strong.'' Opposition treasury spokesman Joe Hockey said Mr Swan's comments criticising the Tea Party movement and in turn, the opposition, amounted to little more than ''peddling hatred''. ''What is it with the Labor Party and hatred?'' Mr Hockey said. ''They hate people that make money, they constantly attack individuals who are successful and employ other Australians ... I'd like to hear Wayne Swan say something positive about someone, somewhere. ''They've got to stop talking about the people they hate and start talking about the people they admire.

"And I'd go beyond Bruce Springsteen in that regard,'' Mr Hockey added, in a reference to Mr Swan's declared admiration for the music and values of the American singer. Opposition Leader Tony Abbott said Mr Swan's speech was ''extraordinary''. ''This is someone who is spending his time criticising others rather than getting on with his job,'' he told reporters in Sydney. ''The treasurer of Australia should be bigger than going around labelling members of the Republican Party of the United States 'cranks and crazies'. ''They would be quite entitled to retort that the cranks and crazies are the people in charge of economic policy in Australia, giving this great country a completely unnecessary carbon tax and saddling generations of Australians yet unborn with the consequences of a $120 billion black hole of spending that Wayne Swan has promised.''

Prime Minister Julia Gillard backed the substance of Mr Swan's speech, saying it was appropriate for her deputy to point out the risks facing the global economy and their potential consequences for Australia. ''The treasurer has been making appropriate comments today about potential risks,'' she said. ''You would expect him to be doing that.'' Mr Swan denied his comments were inflammatory in a presidential election year, saying it would be ''pretty inflammatory'' to see a country default. ''That would have very serious implications for the global economy,'' he said. ''It's the last thing the global economy needs.'' Mr Swan painted a rosier domestic fiscal picture, vowing again to return to surplus, and saying although the task ''is made harder by a fall in commodity prices'', a surplus is ''still our best defence against the current global economic volatility and sends a clear message that we are committed to responsible fiscal policy".

Mr Swan said the International Monetary Fund had given an upbeat assessment of the Australian economy, while endorsing the government's aim of returning its budget to surplus and the flexibility of the Reserve Bank to adjust monetary policy. Delivering the speech, the Treasurer was also an optimist about China, saying economic discussions there have convinced him much of its slowdown is deliberately engineered. "We really just need to keep things in perspective," he will say. "China is now 40 per cent larger than in 2008 so its growth rate can be 20 per cent lower for it to make the same contribution to global growth." "It's like Usain Bolt easing off a bit at the end of the 100m because he's 10 metres in front and has already smashed the world record."

with AAP