The self-praise continuesPresident Moon Jae-in emphasized that fiscal expansion is a “necessity,” not a “choice.” He stressed the need for an “aggressive fiscal policy” to protect the economy against external shocks and to prime the pump. Fiscal expansion is inevitable to prevent recession in a downturn. But many question the motive behind the record spending ahead of the general election in April next year.
Ruling Democratic Party (DP) Chairman Lee Hae-chan is busy stressing that no government has so eagerly met fiscal demands from local governments whenever he visited their budgetary conferences. The National Assembly’s budgetary committee must scrutinize their spending schemes so that no unnecessary tax funds are spent.
The pace of expansion is also worrisome. The 2020 budget is a supersized scale of 513.5 trillion won ($438 billion), up 9.3 percent from this year’s record level. In a speech Wednesday at the National Assembly, President Moon defended the massive spending scheme citing the advice from the International Monetary Fund, which mentioned Korea as a nation capable of coping with challenges through fiscal spending. But a finance forum held a day before raised the alarm about the spending. The growth in fiscal expenditures from 2018 to 2020 was more than double the pace of our real economic growth. The forum noted that such a phenomenon took place only during crisis-fighting periods — after the 1998 bailout crisis, the 2003 burst of the credit card bubble and the 2008 global financial crisis.
The government remains overly casual despite admitting to “grave” conditions. Even as most economists and analysts believe the economy this year will come in under 2 percent, the president found negative factors entirely on the external front. On domestic policies, he was all self-congratulatory — record venture investment, improvement in income redistribution and a best-ever employment rate.
But the data says otherwise. Exports that have been skidding since last December decreased 19.5 percent in the first 20 days of October compared to the same period last year. Facilities investment through August fell 11.8 percent on year. Despite job gains in September, the number of workers on the regular payroll for working over 36 hours fell.
The president and government cannot be entirely blamed for the economic slump. The National Assembly must put aside differences in reviving the economy.
JoongAng Ilbo, Oct. 23, Page 34