By Steve Holland and Mark Felsenthal
WASHINGTON (Reuters) - President Barack Obama warned Republicans in Congress on Monday that he will not negotiate over an extension of the U.S. debt ceiling as part of a budget battle that will soon dominate Washington, with a deadline fast approaching.
Pivoting to domestic policy after devoting weeks to the crisis in Syria, Obama scolded his political opponents for threatening a government shutdown and attempting to attach conditions to funding the budget for the 2014 fiscal year that begins October 1.
"Let's stop the threats. Let's stop the political posturing, let's keep our government open. Let's pay our bills on time. Let's pass a budget," Obama said.
In a speech marking five years since the financial crisis that sent Wall Street teetering to the brink of collapse, Obama said much progress had been made in rebuilding the U.S. economy but much more remains to be done.
He faces yet another budget showdown as Republicans in Congress attempt to force more spending cuts and remove funding for Obama's signature achievement, the 2010 healthcare law that is facing a rocky rollout.
The fight threatens to become a replay of a 2011 budget showdown that barely headed off what would have been a historic default on the U.S. debt over Republicans' refusal to raise the debt limit.
The U.S. Treasury is expected to exhaust measures to avoid exceeding the $16.7 trillion debt limit as soon as mid-October. If the cap is not raised, the United States will not be able to pay all of its bills and would go into default.
Obama said "the last time the same crew threatened this course of action" that the mere talk of a debt default slowed U.S. economic growth.
"I will not negotiate over whether or not America keeps its word and meets its obligations. I will not negotiate over the full faith and credit of the United States," Obama said.
"This country has worked too hard for too long to dig out of a crisis just to see their elected representatives here in Washington purposely cause another crisis," he said.
A Republican plan aimed at averting a government shutdown on October 1 ran into a wall of opposition last week from conservatives in the U.S. House of Representatives, and leaders delayed votes on it until this week.
The plan, derided as a "trick" by some conservatives, would have let them cast an essentially symbolic vote to defund the healthcare law without risking a shutdown, which is feared by party leaders who remember the political damage they suffered when government offices shut their doors in the mid-1990s.
Republican leaders were prepared to extend government funding at the 2013 $988 billion annual level that went into effect as a result of across-the-board cuts called sequestration. The White House signaled last week it could live with a short-term extension at that level, even though the president wants to reverse the sequester cuts.
However some Democrats have said they want higher spending and would oppose a stopgap funding bill at the post-sequester amount.
Obama said the Republican argument for spending cuts is belied by the fact that U.S. deficits are falling at the fastest rate since World War Two.
(Additional reporting by Jeff Mason; Editing by Christopher Wilson and Vicki Allen)
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