Efficient administering is the key

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Efficient administering is the key

The opposition Democratic Party has announced that it figured out how to fund its much-touted “universal welfare” idea, which includes free school lunches, free early-childhood day care and free medical insurance. The party said that the gargantuan budget of 16.4 trillion won ($15 billion) needed for such social services can be effectively covered by 20 billion won, which the party argues can be secured by efficient management of the government’s coffers and thorough revamping of the current tax system, without collecting more taxes. It also claimed that such a way could achieve the goal of universal welfare without hurting the financial health of the government.

We appreciate that the DP has now turned its attention to the nation’s fiscal health because the biggest worry about those hefty social services comes from the inevitable deterioration of the government’s financial health. A welfare plan of such magnitude, when pushed excessively, is doomed to fail and will most likely lead to government bankruptcy.

Particularly, we’re wondering if such a grandiose plan can be implemented with a mere budget of 16 trillion won. Not to speak of the ruling Grand National Party’s claim that it would need at least 34 billion won, most welfare experts agree that the budget will exceed at least 16 billion won. Another question arises over how the DP believes it can raise 20 billion won by budget cuts and withdrawal of tax cuts alone. For example, the DP has so far put the brakes on the current administration’s efforts to reduce the scope of tax-free items. But now, the DP argues for the elimination of such taxes, which makes us suspicious of the party’s sincerity. If the government’s expenditures increase while its revenues decrease, the only option is raising taxes. That’s why we are doubtful of the DP’s populist slogan of “free welfare without tax hikes.”

We hope that the party will withdraw the proposal as soon as possible. Instead, it should exert its effort to realize “efficient welfare” by improving the existing management system.

The JoongAng Ilbo’s latest feature story said that the government’s welfare expenditures have been spent on the wrong people, causing a colossal loss. About 180,000 people not eligible, for instance, for child-rearing allowances received government subsidies from various agencies, costing 330 billion won of tax money annually.

If the Democratic Party wants to join the ranks of responsible political parties, it should first think about how to mend the porous welfare system.
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