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Lawmakers in Washington are working to hammer out a budget deal in time to avoid the "fiscal cliff" — steep tax hikes and cuts in government spending set to take effect at the beginning of next year.
One of those tax increases would happen because a payroll tax cut enacted two years ago is due to expire at the end of this year.
What does it all mean for credit card companies like Discover Financial Services?
During a conference call with Wall Street analysts on Thursday, Discover Chairman and CEO David Nelms said he doesn't expect the fiscal cliff and its possible tax ramifications to have a major impact on the credit card and payments processing company's sales volume — if consumer confidence doesn't plummet.
QUESTION: Looking out to next year, I know there's a lot of uncertainty around the fiscal cliff, but it seems like — at least one thing that seems consensus from both sides — is the elimination of the payroll tax cut that's been in place the last couple years, and (I) just was wondering if you could give any thoughts as to how that might impact your volumes looking out to next year?
ANSWER: I think in terms of fiscal cliff, we don't have a separate plan, as I've heard some companies have ... I don't expect a big impact. I do expect something to get resolved. I think the big wild card is what happens to consumer confidence. And I think as long as consumer confidence doesn't take a big nosedive, I expect our sales volume and so on to continue doing just fine.
If consumer confidence, for whatever reason, went down significantly, then that's what would probably start affecting sales volume.