A heated race to splurge

Presidential candidates’ heated race to spend more rings alarm bells. Lee Jae-myung of the ruling Democratic Party (DP) and his rival Yoon Suk-yeol from the opposition People Power Party (PPP) are competing to make one populist pledge after another to win votes in the March 9 election. The spending competition has reached a point where the public cannot keep up.

It started with a contest to increase the amount of a supplementary budget in January shortly after the government approved a 14-trillion-won ($11.7 billion) extra budget. The two presidential candidates demanded the tally be increased to 35 trillion won. The DP and PPP agreed to negotiate it immediately after the submission of a supplementary budget bill on Monday.

Many people question the justification of the January supplementary budget, the first of its kind in 71 years since the Korean War. They could not understand why the government talks about a supplementary budget even before the whopping 608-trillion-won regular budget for 2022 is yet to be spent throughout the year to help fight the Covid-19 pandemic. A government-version of the Tragedy of the Commons is being played out in Korea today.

The developments may embarrass the obedient Ministry of Strategy and Finance, as it offered the administration the grounds for an additional supplementary budget based on its wrong projection of excess tax revenue for this year. But the ministry must resist the government’s temptation to splurge more. The Moon Jae-in administration drew up a supplementary budget 10 times over the past five years. The total amount of the administration’s supplementary budget has already exceeded 150 trillion won, which is even more than the 90-trillion-won supplementary budgets drawn up by the previous three administrations.

Worse, the PPP is joining hands with the DP. In reaction to Lee’s hefty proposals, Yoon proposed to give 2 million won in monthly salary to all conscripts in the military. In response, Lee promised to cover the cost for hair loss treatment with national medical insurance and hand out 1 million won annually to the young as basic income. That’s not all. He wants to increase the amount of disaster relief for small merchants to 3 million won to 10 million won without any funding plan.

A country’s fiscal health can hardly recover once it is damaged critically. The government’s dangerous play with money must stop immediately.