What Bernanke said in his congressional testimony today, according to the Journal:

Tuesday, the Fed chairman said lawmakers now need to focus on reining in government budget deficits over the long run.

A deficit-reduction plan, he said, could yield immediate benefits in the form of lower long-term interest rates and improved business confidence. If the White House and Congress failed to produce a credible plan to reduce the deficit in the long-run, he warned, "we risk having neither financial stability nor durable economic growth" [emphasis added].

What the GOP says he said, again according to the Journal:

Republicans used his deficit concerns to argue against Mr. Obama's fiscal-stimulus plan and the president's effort to rewrite health-care laws, which could fatten the deficit further still.

It's really hard to know how much of this is stupidity and how much of it is cynicism, but good God is this asinine. To briefly review: There's this thing called the short-term deficit and another thing called the long-term deficit, and there's often very little positive correlation between the two. In fact, sometimes they're negatively correlated. For example, this winter we passed a stimulus bill. It ran up our short-term deficit, but without it, it's possible the economy would have slid into a Japan-style lost decade, which would have massively increased our long-term deficit. This is the reason Fed Chairman Bed Bernanke, outspoken critic of long-term deficits, supported the measure, which was designed to increase the deficit in the short-term. Is this really so complicated?

(In fact, even if you disagree with me about the urgency and effectiveness of the stimulus, it's extremely difficult to interpret Bernanke's testimony today, which dwelled on the risks of a long-term deficit, as an argument against it. The stimulus amounts to a tiny fraction of our long-term deficit, which is overwhelmingly driven by Medicare and Medicaid.)   

P.S. I've seen Bernanke's written testimony, but not a transcript of the hearing. It's theoretically possible that he departed from this stance during the questioning, but I really, really doubt it.

--Noam Scheiber