Vying for helicopter moneyRivaling political parties are vying for helicopter money to woo voters ahead of the two by-elections for mayoral posts in Seoul and Busan next April. The main opposition People Power Party (PPP) at least had the decency to suggest a cut in next year’s budget to make room for relief funding. But the ruling Democratic Party (DP) is heedless. It proposed a 2 trillion won ($1.8 billion) addition to next year’s record spending plan of 555.8 trillion won — an 8.5 percent increase from this year’s super-sized budget — to provide for stimuli checks around Lunar New Year. The ruling party is proposing a debt-financed handout for the people in return for their election victory.
The third wave of the virus in winter has tightened social distancing and aggravated shopkeepers by prohibiting eating inside after 9 p.m. Fiscal stimuli to aid the hard up is necessary to weather the storm. But issuing more debt without calculating the outcome is dangerous because the government already drew up four supplementary budgets which are to incur a colossal debt of 44.2 trillion won this year alone.
Stretching fiscal spending without knowing when the Covid-19 crisis will end is highly risky. Issuing national bonds without regards to the damage to our fiscal integrity cannot go on. PPP floor leader Joo Ho-young called for rationalization in next year’s budgetary outline so that state governance does not run entirely on debt.
The way the DP has been proposing budgets has been farcical. It proposed a 5 trillion won increase to next year’s budget after the PPP vowed to campaign for 3.6 trillion won in fresh relief handouts.
The effectiveness of relief checks also must be studied. Since relief funding has already been doled out twice, more investigation is needed to check if there can be any better means to aid the most beleaguered class. According to household income data for the third quarter, income disparities between the richest and poorest only worsened. Income for the rich rose at a faster rate because they benefited from the government’s uniform handout for child care.
Instead of dropping generous handouts, the DP must study harder effective ways to improve the livelihoods of people in need. The government must stop being swayed by the DP and take the initiative to design a more productive aid program.