Dereliction of dutyIn a strange turn of events, the National Assembly has demanded more spending from the government even after it drew up a 513 trillion won ($439.3 billion) supersized budget for next year. The legislature’s 17 standing committees want the government to increase its spending by 25 trillion won, including 2.3 trillion won for construction in constituencies of lawmakers. Most of the money will be spent to help win votes in the general elections next April. The government’s big budget has already been under attack for earmarking money for improving infrastructure in communities represented by lawmakers from both sides of the aisle.
A legislature should keep a close watch on an administration’s spending plans and cut the money if necessary. But our lawmakers are going in the opposite direction. Instead of playing their proper role as a fiscal watchdog, they are encouraging the government to spend more.
Korea’s fiscal condition has reached an alarming level. The government will have to issue bonds worth 60 trillion won to make up for fiscal losses next year. The government expects its debts to exceed 1,000 trillion won by 2023. Fiscal experts say that is quite an optimistic projection. The Moon Jae-in administration expected its fiscal deficit for this year to hit 42.3 trillion won. But the deficit has reached 49 trillion won by September. Did presidential spokesperson Ko Min-jung speak correctly when she underscored the need to spend money as it “gets rotten if you only stack up grains in a barn.”
The prospects for next year are not bright. Due to the poor performance of the corporate sector, the Moon administration has trouble collecting corporate tax from companies. For instance, operating profit of major companies decreased by a whopping 75 percent in the third quarter. With less corporate tax than before, the government must spend less.
The government’s idea of fiscal integrity seems suspicious. Deputy Prime Minister for the Economy Hong Nam-ki said he will consider the introduction of internal rules to protect fiscal integrity in the second half of 2020 — several months after the election in April. In 2016, the ministry drafted a bill to strengthen fiscal health to prepare for a rapidly-aging society. If the government only mends it a bit, it can announce the rules shortly. Why does it want to delay it until after the election?
Government budgets tend to grow. The National Assembly must immediately start preparing fiscal rules before it’s too late. Otherwise, its members will face revenge by our future generations.
JoongAng Ilbo, Nov. 20, Page 34