[Editorial] Sugar-coated pledges

By Yu Kun-ha
  • Published : Apr 5, 2012 - 11:57
  • Updated : Apr 5, 2012 - 20:35
The Ministry of Strategy and Finance has issued another warning against welfare populism pursued by political parties, saying their welfare-related campaign pledges are simply beyond the reach of state finances.

According to the ministry, the recently finalized welfare platforms of the ruling Saenuri Party and the main opposition Democratic United Party offer a total of 266 programs, excluding overlapping ones.

If these programs are implemented in their entirety, the ministry said, it would cost the nation a minimum 268 trillion won over the next five years, or about 54 trillion won a year.

Given that the nation’s welfare spending for this year is set at 92.6 trillion won, a 60 percent increase would be necessary each year to execute the two parties’ welfare pledges.

The ministry says its estimate excludes the related outlays of provincial governments, which must be substantial as most welfare programs in Korea are only partially funded by the central government.

The ministry did not disclose a detailed assessment of the two parties’ funding schemes, saying that doing so could be seen as an intervention in the April 11 parliamentary election.

But it did say that their financing plans were woefully inadequate to meet the expected spending increases. The two parties suggested they would raise corporate and personal income taxes, streamline budget spending and reform social security. Even if all these steps are put into practice as planned, the ministry says, the two parties will still be unable to raise enough money to fund their programs.

The ministry’s conclusion is that the welfare blueprints of the two parties are simply unsustainable. Any attempt to implement each and every campaign pledge of the two parties will require the introduction of new taxes or the issuance of more government bonds. This will inevitably harm the nation’s fiscal health and, more importantly, transfer the burden of financing social welfare for today’s citizens onto future generations.

Hence we urge voters not to be deceived by the sugar-coated promises of political parties. They need to remember that the nation’s welfare spending is bound to surge in the future due to rapid population aging, even if no new welfare programs are introduced.

Voters should also bear in mind that the nation is facing a need to prepare for possible unification with North Korea. Kim Jong-il’s death has sharply increased the chances of unification coming like a thief in the night.

The government has created a “unification jar” to raise funds to finance the costly post-unification integration processes. But the jar is still empty. Political leaders, if they are truly worried about the future of the nation, should get their priorities right.