Obama: Republicans promising economic chaos if they don't get what they want

Barack Obama on Monday accused his Republican opponents of holding the economic recovery to ransom, as the US faces another deadline over its borrowing limits.

In a speech that was overshadowed by news from Syria and fatal shootings at the Washington Navy Yard, Obama said he would not negotiate over an extension of the US debt ceiling as part of an escalating budget battle in Congress.

"I cannot remember a time when one faction of one party promises economic chaos if it doesn't get 100% of what it wants. That's never happened before. But that's what's happening now," said Obama.

In a speech marking five years since the start of the financial crisis that triggered the deepest recession in living memory, Obama said much progress had been made in rebuilding the US economy but much more remained to be done.

Republicans are attempting to force more spending cuts and remove funding for Obama's 2010's affordable healthcare act, known as Obamacare, as they negotiate an agreement on the 2014 fiscal budget that begins on 1 October.

In 2011, a similar row led to an historic downgrade of the US's debt rating and caused panic on financial markets around the world. "I will not negotiate over whether or not America keeps its word and meets its obligations," Obama said. "I will not negotiate over the full faith and credit of the United States."

Obama said the financial crisis had "sent an economy already into recession, into a tailspin". Five years after the collapse of the Lehman Brothers investment bank, which precipitated the financial meltdown, Obama said: "It's hard sometimes to remember everything that happened during those months, but in a matter of a frightening few days and weeks some of the largest investment banks in the world failed, stock markets plunged, banks stopped lending to families and small businesses, our auto industry – the heartbeat of American manufacturing – was flat-lining."

Obama said the US had "cleared away the rubble from the financial crisis and we've begun to lay a new foundation for economic growth and prosperity".

In the last three and a half years, the economy has added 7.5m new jobs and the unemployment rate has come down, Obama said. "Our housing market is healing. Our financial system is safer," he said.

He said more work needed to be done and the economy had to grow faster. "Because even though our businesses are creating new jobs and have broken record profits, the top 1% of Americans took home 20% of the nation's income last year, while the average worker isn't seeing a raise at all," Obama said.

Obama said the fight over the US's debt ceiling threatened that recovery. If Congress does not reach an agreement soon, treasury secretary Jack Lew has said the US will reach its borrowing limit in mid-October and will likely be unable to pay all its bills soon after. In a letter to Washington leaders last month, Lew warned such a situation would do "irreparable harm" to the US economy.

"After all the progress that we've made over these past four and a half years," said Obama, "the idea of reversing that progress because of an unwillingness to compromise or because of some ideological agenda is the height of irresponsibility. It's not what the American people need right now."

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