Bernanke: GOP cuts could cost hundreds of thousands of jobs

However, he repeated his claim Wednesday that a top priority for Congress should be to put together a credible plan to bring down the deficit over the long term.

“The concern is that if the federal deficit remains on an unsustainable path, that we could see at some point a sharp increase in interest rates, which would be both bad for recovery and bad for financial stability,” he said. “It’s very important and will be very constructive for Congress to lay out a plan that will be credible.”

Bernanke has repeatedly called on Congress to get its fiscal house in order, but has tried to stay above the partisan fray, advocating for tax increases, spending cuts, or whatever combination is needed to achieve a healthy budget.

Bernanke’s appearance came as Republicans have become increasingly critical of the Fed’s policies, in particular the Fed’s decision to buy back $600 billion of Treasury bonds in a “quantitative easing” effort. Conservatives warn the policy will lead to higher inflation.

But committee Chairman Spencer Bachus (R-Ala.) said it was Congress’s policies that were forcing the Fed’s hand.

“Any criticism directed at the chairman, you kind of have to point that finger back at yourself,” he told fellow lawmakers.

Rep. Ron Paul (R-Texas), a longtime Fed critic, agreed with Bachus that Congress is ultimately responsible for the nation’s fiscal situation, but accused the Fed of enabling bad behavior with accommodating interest rates.

“The Congress and Fed are symbiotic,” he said. “They know if interest rates go up, the Fed accommodates them. …The Fed really facilitates this spending.”