Populism gone mad

Just a few days after the massive 608-trillion-won ($514.4 billion) budget for next year passed, the ruling Democratic Party (DP) and opposition People Power Party (PPP) are talking about a supplementary budget amounting to at least 100 trillion won. It looks as if the two parties are addicted to supplementary budgets these days. The DP’s endless promises to spend ahead of the March 9 presidential election and June 1 local elections are only followed by the PPP’s efforts to spend more.

After DP presidential candidate Lee Jae-myung pressured the PPP to jointly draw up a 100-trillion-won supplementary budget, his PPP counterpart Yoon Suk-yeol reacted by saying, “The sooner the better.” Both parties linked the budget to the need to expand relief grants for people struggling amid the pandemic. But everyone knows they are just competing to win votes. We are dumbfounded at their unfettered populism contest.

Both Lee and Yoon are bent on spending more without considering the fiscal integrity of the state as long as it helps them get more votes. How could the government afford 100 trillion won more in supplementary budget even after the 608-trillion-won budget for next year already exceeded what it can afford? The 100 trillion won amounts to half of Korea’s annual national defense budget.

After Lee’s proposal of 25-trillion-won in relief grants within this year faced criticism from the PPP, the DP came up with an expanded 50-trillion-won supplementary budget. To the proposal, Kim Chong-in, head of the election campaign committee for Yoon, responded with a plan to increase the amount to 100 trillion won by adjusting next year’s budget and issuing national bonds.

Promises of a mega-sized supplementary budget are the result of the two parties’ heated race to get more votes in the elections. The two parties did not care for “public consensus” on the issue. It is a serious mistake if they really believe they will be welcomed by the voters as long as they spend more.

As citizens are stuck in a gloomy mood, Kim attached some strings: His 100-trillion-won proposal will be carried out after the PPP wins the next presidential election. But it is regrettable that even the opposition joins forces with the ruling party to follow its populist approach. The DP is worse. Though Korea’s growth rate plunged to the one-percent range this year due to slow growth after the DP came to power in 2017, the Moon Jae-in administration has annually escalated its spending by a whopping eight percent to nine percent, the national debt is expected to snowball to 1,070 trillion won next year from 627 trillion won in 2016.

The country’s national debt-to-GDP ratio has exceeded 50 percent. If the figure surpasses the 60 percent ceiling, that will seriously affect its sovereign credit rating, as warned by international credit rating agencies. An additional spending of 100 trillion won on a supplementary budget could be the last straw. We hope the two rival parties put the brakes on their out-of-control populism and present far-sighted growth strategies for the country before it’s too late.