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Simpson, Bowles to Bring 'Cliff' Debate to 'Impact'

The Charles Schwab "Impact 2012" conference starts Tuesday in Chicago, but at least in part will take place under the shadow of the "fiscal cliff" negotiations in Washington.

DNY59 | Vetta | Getty Images

While investors always have a health array of things to worry about on their menu, the fiscal cliff, which entails a series of tax increases and spending cuts set to take place at the beginning of 2013, is taking up all the oxygen these days.

It's fitting, then, that the keynote speakers at this year's Impact conference hold the keys to helping avoid catastrophe in their very hands.

Alan Simpson, the former Wyoming senator, and Erskine Bowles, chief of staff under former President Bill Clinton, authored a much-discussed report that has become inexorably linked to the cliff conversation. (Read More: For Investors, More Fed Easing, Cliff 'Heart Attack.')

The two will be on hand at the conference Thursday in their first public appearance since President Barack Obama gained a second term in the Nov. 6 election.

Obama appointed Simpson and Bowles to head the National Commission on Fiscal Responsibility and Reform, which issued a detailed report on how the nation could cut its onerous debt and deficit burden.

But the commission never formally approved the report, and its recommendations, though much-discussed, have gone entirely unheeded.

Should Congress and the Obama administration not reach deficit-reduction goals by the end of the year, the George W. Bush-era tax cuts, a payroll tax holiday and extended unemployment benefits will go away, and a series of tax increases will take their place. (Read More: 'There Will Be Compromise' on the 'Cliff': Blankfein.)

Economists expect the effect would sap more than half a trillion dollars from gross domestic product and possibly sink the economy into recession.

Coupled with other problems the economy faces, such as slowing growth in emerging markets, weak earnings and pending negotiations on raising the national debt ceiling, it's enough to give headaches all around. (Read More: 'Cliff' Plunge: All but Impossible to Avoid the Pain.)

"There seems to be a slightly improved willingness to cooperate in Washington, but time will tell if it is genuine or not," said Randy Frederick, managing director of active trading and derivatives at Charles Schwab.

Schwab strategists have been mostly bullish on the stock market but are as wary as anyone about the impacts of the fiscal cliff. (Read More: Fixed Income Outlook.)

Stocks have been on a downward trajectory since the presidential election, and many in the market suspect that the cliff is playing a large part.

"With the housing market still improving, GDP estimates on the rise, and optimism about the approaching holiday shopping season, it's not all gloom and doom," Frederick said. "However, given the technical breakdown in the major averages, the fiscal cliff and debt ceiling resolution still up in the air and plenty of reasons for concern in Europe, caution may be a better approach in the very near term." (Read More: What Might Happen If Congress Actually Resolved 'Fiscal Cliff.')

The Impact attendees, then, will have much to chew on as they gather for the four-day event.

A varied agenda awaits the thousands of investment professionals at Impact.

Liz Ann Sonders, Schwab's chief investment strategist, will deliver an address Tuesday, while noted market political analyst Greg Valliere of Potomac Research Group also will be on hand.

On Wednesday, Charles R. Schwab himself will offer his thoughts, with Simpson and Bowles on tap Thursday and acting legend Alan Alda appearing Friday to close out the conference.

All in all, there will be much to contemplate and no better time to do it, with the markets and economy at a crossroads.

"The elevated optimism that had crept in alongside the market's rally from early June until the recent top suggested a level of complacency that needed to be worked off," Sonders said. "The (recent) pullback might have done the trick, but it's too soon to tell."

Schwab IMPACT Conference