Jan. 17 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke may encourage lawmakers today to stimulate the economy while aiming to avoid his predecessor's ``regret'' of being tied to specific measures.

Legislators will question the Fed chief on steps to avoid the first recession since 2001 when he testifies to the House Budget Committee in Washington. Bernanke told members of Congress this week that some kind of fiscal stimulus is needed, according to Democratic lawmakers.

Former Chairman Alan Greenspan ``misjudged'' the environment in which he endorsed tax cuts in 2001, and had ``intense'' regret the eventual legislation excluded his specific guidance, he wrote in his 2007 book. Bernanke will try to avoid backing any particular tax or spending policies because doing so could earn criticism from legislators who oppose them, putting the Fed's reputation for independence at risk, analysts said.

``Bernanke will be far more circumspect than Greenspan in terms of specifics,'' said Greg Valliere, chief political strategist at Stanford Group Co. in Washington. ``The last thing he needs is another controversy.''

Greenspan, through spokeswoman Lisa Panasiti, declined to comment. The hearing with Bernanke, 54, is scheduled to begin at 10 a.m. Washington time. Spokeswoman Michelle Smith declined to comment on his testimony.

Conferring With Democrats

The Fed chief told Democratic congressional leaders this week he does back some stimulus. He met with House Speaker Nancy Pelosi of California Jan. 14, and has spoken by phone with House majority leader Steny Hoyer of Maryland and Senator Charles Schumer of New York.

Schumer, chairman of the congressional Joint Economic Committee, said Bernanke told him that ``while he wasn't going to endorse a specific plan, if an economic stimulus package was properly designed and enacted so that it enters the economy quickly, it could have a very positive effect.''

President George W. Bush and his aides have pushed to make permanent the tax cuts passed in 2001 and 2003 that are scheduled to expire in 2010. Democratic lawmakers have warned against any effort to push those reductions, which they argue threaten the longer-term budget outlook and are geared toward higher-income earners.

Hoyer said in an interview with Bloomberg Television that the Fed chief agreed that the steps being considered now ought to be ``kept separate'' from making tax cuts permanent.

$100 Billion

Democratic lawmakers have suggested a package of about $100 billion that includes a rebate for middle-income taxpayers as well as expanded unemployment and food-stamp benefits.

``I believe it can be done in 30 days,'' Hoyer told reporters in Washington yesterday. ``Whether it will be done in 30 days is another question.''

An acknowledgement that the economy is weak enough to need some fiscal medicine may reinforce forecasts the Fed will lower interest rates by half a percentage point when policy makers next gather Jan. 29-30.

``If they're looking for help in this area, it would suggest that they see a lot more downside than they saw three or six months ago,'' said John Silvia, chief economist at Wachovia Corp. in Charlotte, North Carolina, who previously worked as a senior economist in Congress.

Rate Cut Seen

Traders see a 100 percent chance of at least a half-point reduction in the Fed's benchmark rate this month, with a 34 percent chance of another quarter-point, futures prices show. The dollar rose to its highest in two weeks today against the euro after European Central Bank officials said growth is slowing, prompting speculation they may follow the Fed in cutting borrowing costs.

The Fed said in its Beige Book regional business survey yesterday that the economy expanded ``at a slower pace'' in late November and December, with districts reporting ``disappointing'' holiday sales.

Starting with his November 2005 confirmation hearing, Bernanke, a former Princeton University economist, has strived to avoid letting lawmakers use his remarks to advance fiscal legislation.

``I'm going to begin now, I think, a practice of not making recommendations on specific tax or spending proposals,'' Bernanke said at the time.

Bernanke may support some short-term stimulus while urging lawmakers to mind the longer-term budget outlook, Silvia said.

`Fiscal Crisis'

The Fed chairman warned lawmakers a year ago the U.S. may face a ``fiscal crisis'' in the coming decades if it fails to deal with the rising costs of retirement and medical benefits for the aging population.

Greenspan, 81, similarly urged in the 1990s that the White House and Congress work to eliminate budget deficits. When he told lawmakers in 2001 that excessive surpluses could cause ``disruptions'' and favored tax cuts to limit them, it ``proved to be politically explosive,'' Greenspan wrote in ``The Age of Turbulence.''

``Within weeks, it turned out that I'd been wrong to abandon my skepticism about the ongoing surplus,'' when forecasts showed a deteriorating budget outlook, wrote Greenspan, who retired in January 2006 after 18 years at the helm.

Bernanke may get drawn into discussing the appropriate size of a stimulus or whether it should be weighted toward tax cuts or spending projects, said David M. Jones, a former Fed economist who has written books on the central bank.

``He might be drawn into the general outlines of the package,'' Jones said from Fort Myers, Florida. ``It will be more than he intended, but less than Greenspan would have done.''

To contact the reporter on this story: Scott Lanman in Washington at slanman@bloomberg.net

Last Updated: January 17, 2008 06:07 EST