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"We're looking at two key things that matter the most," he says. "The `fiscal cliff' isn't one of them."

Donald Quigley, the co-manager of the Artio Total Return Bond mutual fund, is more wary of the "cliff" for its political impact than its economic impact. If Republicans and Democrats can't reach a compromise, he says, the world could take that as a sign that the U.S. government is dysfunctional.

"It basically says, `We really don't have our act together,'" Quigley says. "To have to admit that your country is ungovernable is not the best way to run a country."

Q: What if there's no deal?

The impact of higher taxes and lower government spending would be felt only gradually, and Congress could always repeal them later, which is why many analysts don't expect panic.

For example, if higher taxes kicked in, workers might get less money in their first few paychecks of the year, and then the government might reach a compromise and refund the money.

"The fiscal cliff is not really a cliff — it's more like a $600 billion hill that will accrue over the year," Carmack says, referring to the amount of money that could be taken out of the economy from higher taxes and lower spending.

Bob Phillips, managing partner at Spectrum Management Group in Indianapolis, compared the "fiscal cliff" to the Y2K scare.

"The thought was that every computer in the whole world is going to malfunction on Jan. 1, 2000, and it's going to be a disaster," Phillips says. "I think this is a similar thing. It's been built up to this perception that everything will fall apart, and it's not."

Jeffrey Saut, chief investment strategist at Raymond James, says he believes government spending cuts will be "bullish" for stocks because the federal budget will be closer to balance.

He says: "So, if we do take the `cliff' dive, and it's not for too long a period of time, the market takes a hit but the economy resets itself. And we continue to grow going forward."

Q: If there is a deal on time, will the market shoot higher?

Not necessarily. Stocks have been rising more or less steadily since mid-November, a sign investors already believed lawmakers would compromise. The Standard & Poor's 500 index has climbed more than 5 percent since Nov. 15.

That signals that a successful compromise is factored into stock prices already. Much more important to the market's performance in 2013 is the economy.

Some investors, like Phillips, are pessimistic, pointing to an unemployment rate that is still much too high and personal income growth outpaced by inflation.

"You really have to stretch to find a positive trend," he says.

Tim Biggam, market strategist at the brokerage TradingBlock in Chicago, says other world economic problems that have faded from the headlines, like the European debt crisis, could roar back.

"It's kind of a false sense of security," he says, "to have the `fiscal cliff' put everything to the back burner."