Bernanke has warned that the Fed does not have the tools to offset the damage to the economy if it goes over the cliff.

At the same time, Bernanke has said that if an agreement can be reached that addresses the nation's long-term budget challenges without slowing the recovery in the short term, next year could be "a very good one for the American economy."

Fear of higher taxes has yet to slow hiring. Employers added 146,000 jobs last month, the government said last week. That's about the same as the average monthly gain of 150,000 in the past year.

The unemployment rate fell to a four-year low of 7.7 percent last month from 7.9 percent in October. But the decline was mostly because more people without jobs gave up looking for work. The government only counts people as unemployed if they are actively searching.

The economy grew at solid 2.7 percent annual rate in the July-September quarter, more than double the 1.3 percent rate in the April-June quarter. But many analysts believe worries about the fiscal cliff are contributing to slower growth in the current October-December quarter below 2 percent.

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