[EDITORIALS]Budgeting by rule of thumbHong Jae-hyung, acting floor leader of the Uri Party, has said that in order to revive the economy, the party will consider drawing up a supplementary budget for the second half of the year. The National Assembly passed this year’s budget on Dec. 31, and now, after only a week, the governing party is talking about an additional budget. Because legislators neglected their duty, deliberation of this year’s budget was held up for more than a month past the legal deadline; because of the delay, the quarterly budget allocation was only set on Tuesday, and some ministries are still not ready with detailed plans for project implementation. Under such circumstances, when we hear talk of a supplementary budget, we find ourselves dumbfounded.
If Uri Party’s leadership finds the situation so urgent as to require an additional budget, then that urgency should have been reflected in the budget passed a week ago. Considering that the originally proposed budget was cut by 961.8 billion won ($916 million), to propose spending trillions more is nothing but cheating.
Lately, supplementary budgets have become almost an annual event. In 2003, two additional budgets were drawn up. This means that government is managed by rule of thumb, and it is why government policy is unpredictable. This money comes from the people. As their incomes decrease due to the slowdown, their tax burden gets heavier. That has a bad effect on consumption. And repeated supplementary budgets, based on deficit financing, have threatened the soundness of the national economy, increasing the national debt from 80.4 trillion won in 1998 to 203 trillion won, or 26 percent of gross domestic product. Therefore, supplementary budgets must be drawn up in a discreet and conservative manner. This is not politicians’ pocket money.
The governing party apparently believes they should use all possible means to achieve the goal of 5-percent growth and 400,000 new jobs. But the “Korean New Deal,” economic revival through expanded financing, is controversial, and there are many who worry about its side effects. If we postpone deciding about an extra budget while watching the economy’s performance in the first half, it won’t be too late. More urgent than a second budget is the need to implement the existing one effectively, without waste.
The ruling party must realize what the economy needs: not more government spending, but the restoration of private investment. This will be possible when politicians encourage business, stop making people uneasy and refrain from putting new burdens on the economy.