Financial markets are operating under the assumption that Congress will reach a deal by the end of the year or early January, said Alec Phillips, a political analyst and economist for Goldman Sachs Group Inc. in Washington. There is “not a lot of indication right now that the market is expecting an adverse outcome,” he said.

“People who describe it as a slope have a point, which is that the world doesn’t necessarily end on Jan. 1, if people assume the issue will be fixed very soon,” Phillips said. “At the same time, it seems pretty clear that if they don’t address the fiscal restraint that’s built into current law within a reasonable period of time, a cliff and a slope are essentially the same thing. The only difference is just the angle.”

When lawmakers have expressed optimism about a deal, stocks have risen. Prices have dropped when they say negotiations are stalled, giving hints at the potential for market declines if talks fail.

Standard & Poor’s

The Standard & Poor’s 500 Index declined 0.5 percent in three minutes on Nov. 29, erasing an earlier rally, after Boehner said “no substantive progress” had been made toward a deal. Bond markets have gained on pessimistic news. The benchmark 10-year Treasury note yield fell for the fifth of six weeks ending Nov. 30 as Obama warned that day of “prolonged negotiations” ahead on deficit reduction.

To bolster his point that the cliff is more of a slope, Stone points to the components of the scheduled fiscal contraction and how they take effect over time. Those effects can be reversed if a deal is reached early in 2013, he said. There are several other fiscal deadlines in 2013 that could push Congress to act, including the need to raise the $16.4 trillion debt limit.

If Congress doesn’t act, the policy changes include higher income tax rates at all income levels, the end of a 2 percentage point cut in the payroll tax, higher tax rates on capital gains, estates and dividends, and automatic spending cuts, about half in defense programs.

Paycheck Withholding

Most of the effects would occur over the course of the year. Because most taxes are collected through paycheck withholding, only a fraction of the effect occurs each week or month.

The spending cuts operate in a similar way because agencies spend money over time, not in lump sums at the beginning of the year.