Moon Jae-in administration transfers debt to next administration: DONG-A ILBO

South Korean President Moon Jae-in delivered his last budget speech to the National Assembly on Monday. It was an opportunity to explain next year’s budget plan, which has been extended to 604 trillion won, and to give his opinion on all affairs of state. Government spending has increased by 50% five years after the start of the current administration, and the national debt has passed the 1,000 billion won mark for the first time in history. The current administration has been generous in increasing the populist welfare and employment budget with debt throughout its tenure. The final budget speech is also criticized for containing too many “reasons to spend money”. The burden created by “fiscal populism” will likely fall on the next administration and on the people.

President Moon said next year’s budget will be used for a full return to normal life and public livelihoods. The budget management of the current administration is close to failure, even given the COVID-19 situation. Its social welfare and employment budget, which has exceeded 200 trillion won, focuses on one-time cash assistance. Even after spending around 100,000 billion won on job creation over the past four years, the number of job seekers abandoning their job search is at an all-time high. Whenever money was needed, for example in response to the COVID-19 crisis, the government responded by increasing the budget, claiming that the country had healthy public finances. No effort has been made to reduce unnecessary expenses.

The burden of unnecessary public spending rests on the shoulders of the people. Due to the accumulated deficit as a result of employment funds devoted to short-term job creation projects, the national employment insurance premium will increase again next year after 2019. Insurance rates have increased for the fifth year in a row, as the scope of health insurance coverage has been significantly expanded as a result of “Moon Jae-in Care”. In addition, Medicare finances are in danger of being exhausted in the next government.

Despite the circumstances, President Moon said the government has dramatically reduced the burden of medical spending on the population. This is why the speech is criticized as being full of self-praise. The two most difficult items to reduce in public finances are the cost of labor and the retirement of civil servants. Under the current administration, the number of civil servants has been increased by around 120,000, more than double the number of civil servants increased in the two previous governments. This high cost structure becomes permanent but the government is avoiding a pension reform. The current administration takes all the credit and transfers the responsibility to the next administration.

The government belatedly declared that the government was strapped for cash, but kept increasing the budget. President Moon said the government was striving to achieve harmony between fiscal expansion and fiscal strength, but that was not enough to persuade the public. The next administration will be faced with a situation where there are a lot of places to spend money with a lot of debt. All of these burdens will inevitably fall on businesses and individuals.

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John A. Bogar

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