The world was nervously following the political negotiations over the fiscal cliff in the U.S., and it seems that there was a dramatic agreement between the two parties at the very last moment to avoid it. The key issue during the negotiations, the one that caused the most debate, was raising taxes on the rich.
In terms of increasing income tax rates, the Democratic Party proposed that the rate increase should start at $200,000 for an individual, while the Republican Party proposed that the rate increase should start at $1 million. But the two parties finally agreed to raise tax rates on annual incomes that start at $400,000 for an individual ($450,000 for a household). This result might look silly, but it makes an enormous difference in the amount of tax revenue.
As the fiscal cliff was avoided, everything can go back to normal for now. But there still remains the issue of the federal debt ceiling. There is no debt ceiling system in Korea. Its National Assembly passed the 2013 budget on Dec. 31, and now its government can just execute the budget. But in the U.S., since there is a statutory cap on how much the government can borrow and it cannot borrow any more once it reaches the debt limit, unless the Congress raises it. Thus, in the worst case scenario, not raising the debt ceiling can shut down the U.S. government.
The common prediction shared by economists all over the world is that the U.S. economy will get much better, starting this year. The reason is that the U.S. economy is not directly influenced by the European financial crisis, since it does not depend on exports as an economy like China’s does, and also that the U.S. domestic economy will get stronger and create more jobs as housing construction is beginning to rise. Every economist also shares the view that if the U.S. economy rebounds, so does the world economy.
So what kind of outlook does Korea have for this year? After the presidential election in Korea, the foreign press is very optimistic. For starters, Korea has regained political stability. Also, Korea was able to continue its unwavering commitment to national security by maintaining its strong alliance with the U.S. Finally, the nation showed both patriotism and a will to protect democracy through its high turnout of voters.
In 2012, with the world economy suffering, Korea was the only country that received a higher credit rating than before. It was elected as a member of the U.N. Security Council, getting 147 votes at the U.N. General Assembly. K-pop, “Korean wave” dramas, Korean players in various sports, and Psy’s “Gangnam Style” shook the whole world. But the most important thing was that Korea managed to attract the headquarters of the U.N. Green Climate Fund to Songdo, beating out such major countries as Germany, Mexico, Poland, and Switzerland. The Green Climate Fund, which has currently raised $10 billion, plans to raise $100 billion by 2020. Having the headquarters of this program in Songdo is a tremendous achievement for us. Its economic effect on Incheon will be immense: hotels will be needed to accommodate foreign participants of various conventions, big or small, as well as apartments, shops, and cultural facilities for tens of thousands of employees. This was one of the important diplomatic achievements of the Lee Myung-bak administration.
Another thing that amazed the foreign press was the high turnout of voters ― 75.8 percent, in Korea’s presidential election. In last year’s U.S. presidential election, the voter turnout was only 57.5 percent. It is difficult to get voter turnout over 60 percent in the U.S. The most important thing was that over 89 percent of people in their 50s came out to vote in Korea. People in that generation were the very people who donated wedding rings and gold watches to the country’s gold supply to overcome the IMF financial crisis 16 years ago.
Now a vibrant new era is coming to South Korea. North Korea is completely isolated after its long-distance rocket launch that violated a U.N. Security Council resolution. The time has come for South Korea to prepare for unification with North Korea through direct bilateral talks. Electing a female president by a country known to be a traditionally male-centric, even before the U.S., Japan, and China, has received a great response from the international community. Now what remains for us to do is to try again to achieve “747” (7 percent economic growth, $40,000 per capita income and becoming a top seven world power). Furthermore, hope for the unification of the two Koreas is beginning to turn to reality.
For Korea, 2013 will be a really blessed year. It will also be the year the U.S. economy slowly rises again. The housing market will regain its vitality in the U.S. and with Obama’s pivot to Asia, the U.S. will move its focus from Europe to this continent. Due to Obama’s policies, the U.S. manufacturing industry will begin to revitalize for the first time in 50 years. It will also be a vibrant year for us, Korean Americans, as we can have closer relations and exchanges with our native land, Korea.
Jay Kim is a former U.S. congressman. He serves as chairman of the Kim Chang Joon US-Korea Foundation. For more information, visit Kim’s website at http://www.jayckim.com.