Fiscal prudence comes first

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Fiscal prudence comes first

There are important lessons to be learned from the recent economic and confidence crises to hit Europe and the U.S. about the wisdom of fiscal purse-tightening and of maintaining a united front, but some of our politicians do not seem to be listening.

Financial markets are sufficiently sensitive and interlinked now that all it took to send equity prices tumbling around the world was the S&P’s downgrade of the U.S. sovereign credit rating by one notch last week, showing how deficit problems can wreak havoc on the global economy.

As such, it was a surprise to hear the floor leader of our ruling party propose even more ambitious welfare plans one day after the bad news from the U.S. sent local stock prices into a free fall.

Hwang Woo-yea said at a press conference marking his 100th day in office that he will propose a plan to the GNP and the government to expand free child care to all families in the country with children under the age of five. The program is designed to boost the nation’s birth rate and should be considered a part of Korea’s free elementary education, he said, adding that a budget of 1 trillion won ($919 million) a year would suffice. However his plan is seriously flawed, and is in danger of misguiding the public. Child care and education are not one and the same.

Meanwhile, the opposition also erred by pitching complementary school lunches as part of its free education policy. But instead of correcting the mistake, the ruling party supported it by backing Seoul Mayor Oh Se-hoon’s decision to push for a referendum on the issue.

Now the GNP floor leader is confusing the issue by sending mixed messages on his party’s welfare policy, and in the process opening it up to attack from the opposition. Hwang has also ignored party protocol in unveiling his half-baked ideas. A floor leader is supposed to coordinate opinions within the party rather than pitch his own ideas.

Upon his appointment, Hwang said he will try to trim college tuition fees even as the government and parties are still unsure about how to proceed on the matter. What he does not seem to realize is that once welfare spending is initiated, it is difficult to stop. The welfare budget is different from pork barrel spending, and it needs to be monitored carefully for Korea to maintain a stable level of credit. Our politicians should worry more about the country’s future, and less about next year’s elections.
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