Economists worry that going over the cliff will plunge the country into recession. (Read More: No 'Cliff' Calamity: That's What Stocks Are Correctly Predicting)
Dimon wasn't as dour in his forecast of the consequences but said it would be foolish to take the chance.
"It might be a big deal. We shouldn't take the risk," he said. "I think it's a big deal that we do it right because it can save jobs, get the country going again, return confidence both in the United States and globally."
As for specific ideas he has to fix the problems associated with the cliff, Dimon said he and others on Wall Street expect higher taxes, but he wants them balanced with sensible cuts in spending. (Read More: Go Back to 'Square One' for 'Cliff' Solution: Blackstone CEO)
The tax increases would target a wide swath, from a payroll tax holiday enacted two years ago to the across-the-board tax cuts associated with former President George W. Bush.
On top of that, sweeping spending cuts would constrain the size of government, particularly in the military.
"Businesses want a rational deal because most people think it would be great for the United States of America," said Dimon, who insisted that tax increases be "linked inexorably together with rational entitlement reform."
Apart from the fiscal cliff negotiations, Dimon has been a harsh critic of the increased regulations slapped on the banking industry in the wake of the financial crisis.
Asked what his relationship is with the White House, he said tersely, "It's fine," and said politically "I'm still barely a Democrat." He declined, however, to say whom he voted for in the November election, which saw President Barack Obama given another term.