The official projections are showing scary numbers for the fiscal cliff, but when we dig into the details we see that the real impact will likely be materially less significant. According to the Congressional Budget Office, the fiscal cliff adds up to a total increase in tax revenue of $631 billion, which is approximately 4% of GDP. Going through the report line by line tells a different story. The expiration of the Bush tax cuts for the top 2% of wage earners would amount to $52 billion or roughly 0.3% of GDP. Although raising taxes on top earners will affect their investment decisions over the long-term, it will have little effect on their consumption behavior in the near-term and will not meaningfully impact the economy in 2013. Similarly, raising the capital gains tax will not have a material impact on consumption. Our estimate of the actual impact of a worst-case scenario full dive off the cliff is between 1.5% and 1.8% of GDP based on tallying up the cost of each item. This would be a much more manageable result than what is currently being discounted by the markets.