Get real on welfare
President Park Geun-hye’s campaign promise - “Welfare without tax hikes” - appears to have led to nothing but tears. In the third year of her five-year, single term, no one believes that slogan is even remotely possible except, perhaps, for some precious true believers at the Blue House. That’s why the government’s recent tax refund fiasco triggered a new debate on how to fund the ever-growing demand for welfare. If the president’s pledge is not achievable, it’s time she put it to rest. With no major elections scheduled for 2015, this could be the perfect time to humbly withdraw an unattainable commitment to welfare.
The 2012 presidential election was a battle of sugar-coated welfare promises. Despite the Ministry of Strategy and Finance’s stark warnings about the costs of such campaign promises, the ruling and opposition parties didn’t budge. They stuck to promises of universal welfare without tax increases. Now the victor, President Park, is paying the political price.
The government believed it could successfully foot the bill for the expanding welfare services by raising 27 trillion won ($25 billion) from untaxed areas of the underground economy, 18 trillion won from revamping tax codes and 84 trillion won from restructuring the government’s annual expenditures. That was empty talk. The government’s effort to bring the black economy out into the open flopped because the economy was running out of steam. It raised a modicum of additional tax revenues of 3 trillion won. The government’s endeavor to reform the current tax system went down the drain because of taxpayers’ resistance, and the promise of a slimming down of government expenditures went up in smoke due to the government’s expansive fiscal policies to revitalize the economy. You lose some - and you lose some.
Yet government spending on welfare swelled. When such a trend continues, no country can handle it, as seen in the National Assembly Budget Office’s warning last week of a national bust around 2033.
President Park may feel sorry for herself for not keeping all her promises. But she must not be trapped in the oxymoronic pledge of “welfare without tax hikes.” It is time to rebuild our welfare systems, making them a selective system tailored for the needy. But first, the president must seek the understanding of the people before embarking on full-fledged welfare restructuring based on national consensus. The government must awake from the illusion of welfare without tax increases. It sounded too good to be true, and was.
JoongAng Ilbo, Jan. 28, Page 30