A race to spend more

As ruling Democratic Party (DP) presidential candidate Lee Jae-myung pushes ahead with a third universal relief grant before the March 9 presidential election, his rival Yoon Seok-youl of the opposition People Power Party (PPP) matches it with a populist proposal. In a recent interview, Yoon promised to expedite offering 50 trillion won ($42.5 billion) in compensation for financial losses from restrictions on business hours and customers within the first 100 days of inauguration.

In his acceptance speech after winning the primary on Nov. 5, Yoon criticized the Moon Jae-in administration for populist policies that exploit tax funds and the future generation by pushing government debt to snowball to more than 1,000 trillion won. He defined the expansionary fiscal policy of the government and Lee’s push for another universal cash handout as populism. Lee called the presidential race a contest between a “rationalist and populist.” But as soon as the race took off, he’s also been swept up in populism.

Yoon’s proposal for compensation for the self-employed cannot be directly compared to Lee’s idea of a universal relief grant. The self-employed whose businesses were devastated by forced mitigation rules should be compensated appropriately. But promising cash remuneration before finding financing means can appear as a populist move.

The 50 trillion won Yoon proposed amounts to 8.3 percent of the 2022 budget. Korea’s national debt has been rising at the fastest pace in the world, while its growth potential is projected to become the lowest among developed countries. Yoon’s plan is even questioned by his party members.

Lee’s argument on universal relief grants is more preposterous. He claimed it does not make sense for a rich country to not offer a relief grant to its poor people as excess tax revenue is expected to reach approximately 40 trillion won this year. Despite worsening fiscal integrity, Park Wan-joo, policy chief of the DP, also backed the plan.

But they are wrong. The government has already issued national bonds worth 104 trillion. The 31.5 trillion won in surplus in tax revenue was already spent to finance the second supplementary budget. The remaining 10 trillion won should first be spent on paying off government debt.

People on the receiving end also do not agree with the populist idea. The majority oppose the third universal handout. They are more worried about ramifications in the future instead of the 1 million won they would get from the government. It is sad that our politicians cannot do the simple math most people can.