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Beware of overspending next year

Published: 23 Dec. 2012, 20:55

The intense presidential race is now a thing of the past. Now, we need to wake up and face the cruel realities of the present. The National Assembly activated the Special Committee on Budget and Accounts from Friday. Having already passed the Dec. 2 deadline to settle next year’s budget bill, the legislature has a tight schedule to review the bill and pass it with a full assembly vote by the end of the year. At the current pace, it will be nearly impossible to pore thoroughly over the budget, but for now, glancing over it will be enough. In addition, the economy hardly grew in the third quarter, with this year’s growth expected to hover around merely 2 percent, and prospects for a boost next year are also bleak. A delay in next year’s budget against such a backdrop would slow fiscal spending and further dampen recovery.

The ruling Saenuri Party and main opposition Democratic United Party have reportedly reached a consensus to cut back the budget by about 1 trillion won ($930 million) in a subcommittee meeting. Instead, they are poised to raise welfare spending to honor their campaign promises.

President-elect Park Geun-hye of the ruling party vowed to include spending on free day care service for infants under the age of 5 and 6 trillion won extra to boost the economy in next year’s fiscal and public fund budgets. The Saenuri Party is considering issuing government debt in order to raise funds to carry out its campaign promises. Meanwhile, the Democratic United Party proposes to raise at least 7 trillion won for common welfare subsidies in day care services, college tuition fees and spending to increase jobs while scaling down elsewhere in the overall budget.

The 2013 budgetary bill has already been drawn up in an expansionary tone to support the sagging economy. If legislators try to squeeze in new welfare spending on top of that, the budget will likely be in a mess with little time left for a thorough debate or consideration. It is best that the legislature leave the budget bill as originally proposed by the outgoing government for now.

The National Assembly would have to first prioritize its feasible and urgent welfare needs in order to eschew a heavy simultaneous burden on public finances. When deemed necessary and extra budgeting allows, the government should reflect new spending in the budget bill for 2014. If the economy fares worse than expected next year, the new administration and legislature could discuss raising the supplementary budget. At any rate, the ruling party should not ruin the budget under intoxication from its election victory.