ASHINGTON, Sept. 12 — Alan Greenspan, the Federal Reserve chairman, warned today that the economy would suffer if Congress failed to keep the federal budget deficit under control. But he advised against Democratic efforts to replenish the government's coffers by rolling back or delaying the $1.3 trillion tax cut signed into law last year by President Bush.

Appearing before the House Budget Committee, Mr. Greenspan said little about the current condition of the economy, disappointing investors, who had hoped for signals of optimism. Stocks closed lower, with the Dow Jones industrial average falling more than 201 points to 8,379.41, as the market was also hurt by concern about war with Iraq and new indicators of economic sluggishness.

Instead of providing clues to Fed interest rate policy, Mr. Greenspan injected himself into the partisan debate over the reasons behind the rapid swing from budget surpluses to deficits.

The message of the Fed chairman's prepared testimony was that a breakdown of budget discipline over both taxes and spending would lead to higher interest rates and slower economic growth in the long run. Yet in the question-and-answer session, Mr. Greenspan seemed to align himself philosophically with Republicans — and anger Democrats — over how to address the nation's fiscal troubles.

In response to some questions, Mr. Greenspan said the specifics of dealing with the situation were up to Congress, and he urged the House and Senate to extend budget rules, adopted a decade ago with bipartisan support, that theoretically bar tax cuts and spending increases that are not offset elsewhere in the budget.

But at other points he placed himself in the camp of small-government low-tax conservatives. He suggested that increases in domestic spending be tightly limited, that there were long-term economic justifications for additional tax cuts and that it was too late to undo last year's tax cut, even though much of it is not scheduled to take effect for years.

Many Democrats have felt betrayed by Mr. Greenspan for having given Mr. Bush's tax cut a qualified endorsement early last year, undermining the Democratic argument that the tax cut was fiscally reckless.

With Democratic warnings that the tax cut could lead to renewed budget deficits having come to pass — in part as well because of the recession and the costs of fighting terrorism — Democrats have been trying to turn Mr. Greenspan's influence to their advantage by emphasizing his demands for fiscal discipline.

Up to a point, Mr. Greenspan gave Democrats what they wanted. He said he still supported an idea he floated last year, to allow tax cuts and spending increases to take effect only if the budget surplus projections that they were based on proved to be on track. Many Democrats have been making a case that a "trigger" of the sort proposed by Mr. Greenspan would justify canceling or postponing provisions in Mr. Bush's tax cut that have not yet taken effect, including the complete repeal of the estate tax in 2010.

But when asked specifically by Representative Ken Bentsen, Democrat of Texas, whether he would support delaying the scheduled tax cuts by applying the trigger concept to them, Mr. Greenspan said no.

"My own view is, I would prefer not," Mr. Greenspan said.

Mr. Greenspan, who normally couches his views on tax and spending issues in economic terms, cited politics as one justification for his stance, noting that there would be "resistance from a significant majority of the Congress."

He contended that provisions accounting for two-thirds of the tax cut's total value have already taken effect, an interpretation that other economists might dispute. And he said canceling or delaying the provisions not yet phased in would be disruptive to taxpayers who were counting on them in advance.

When asked by Mr. Bentsen how he would square his warnings about higher interest rates and slower economic growth caused by budget deficits with his unwillingness to rethink the tax cut, Mr. Greenspan said he did not "particularly wish to focus on any specific part of the budget."

Even when upset with him, Democrats still treat Mr. Greenspan with considerable deference. But their frustration with him today was thinly veiled. Representative James P. Moran, Democrat of Virginia, suggested that Mr. Greenspan had misled Congress by backing the tax cut last year even though the Fed chairman must have suspected that the $5.6 trillion, 10-year surplus projection used to justify it was built on unrealistic assumptions and an overvalued stock market.

"You knew that $5.6 trillion was not sustainable," Mr. Moran said. "You knew and warned us that the equity markets were hyperinflated, and any number of contributing factors made you more aware than most people that the money was not there."

Mr. Greenspan responded that the $5.6 trillion estimate from the Congressional Budget Office was "professionally as good as you could do."

For their part, Republicans did not have to work hard to tease from Mr. Greenspan support for their view that the key to restoring the budget to balance is holding down the growth of government spending.

When asked by Representative Mac Thornberry, Republican of Texas, if it would be positive for the economy for spending growth to remain "relatively restrained," Mr. Greenspan replied, "It would be positive."

Asked about consideration within the administration for a package of tax cuts intended to help investors by reducing taxation of dividends and cutting capital gains taxes, Mr. Greenspan said the package would have positive economic effects in the long run, though he said it would have to fit within a long-term budget plan that dealt with the deficit.

Mr. Greenspan sided with Democrats on some issues. He said he believed that large budget deficits ultimately push up long-term interest rates, the central point Democrats make in arguing against big tax cuts. And he said there was no reliable way to estimate how much economic growth is created by tax cuts, undercutting attempts by Republicans to adopt budget projections that assume that tax cuts pay for themselves.