Published : 2013-09-24 20:12
Updated : 2013-09-24 20:12
President Park Geun-hye will certainly feel embarrassed when the Cabinet meeting set for Thursday passes the budget proposal for next year, which is expected to curtail funding for her controversial campaign pledges to drastically expand welfare benefits. Her signature program designed to pay basic pension to all citizens aged 65 and older is to be restructured to narrow the scope of recipients and cut the amount of payments.
The reduced funding will also likely trim her other generous plans for covering the costs of medical treatment for four grave diseases including cancer and halving college tuition fees.
During Thursday’s Cabinet meeting, Park is said to seek understanding from the public about the inevitability of curtailing her welfare package in the face of a growing revenue shortage amid prolonged economic slump. The failure to implement her benefit programs is certain to damage her reputation as a credible leader who keeps her word. Until recently, she had adhered to the stance that her welfare pledges could be funded without tax increases by readjusting budget priorities and regulating the shadow economy.
But she now appears to have to face reality, as state budget planners are at their wits’ end working out ways to meet her promises with limited financial resources. It is important to try to keep campaign pledges but it may be more important not to attempt to carry them through at the risk of hurting fiscal health and weakening economic vitality. As a ruling party official noted, it cannot be considered a responsible attitude to stick to election pledges that have proved financially unviable.
The main opposition Democratic Party has accused Park of reneging on her promises with voters. But the liberal opposition, which put forward more costly welfare programs during last year’s parliamentary and presidential elections, might have faced a similar predicament, if it were at the administrative helm.
Next year’s budget plan, which will be subject to parliamentary deliberation and approval, should serve to get the president, the rival parties and the public to recognize the reality that the expansion of welfare benefits cannot but be made gradually in consideration of fiscal limits.
Despite the cut in funding for Park’s key campaign pledges, welfare spending will likely exceed 100 trillion won ($92.4 billion) for the first time in 2014, with its ratio to the government’s total budget rising to the highest level ever. Experts express concerns that it may still be difficult to finance the reduced welfare package during Park’s five-year presidency without tax increases. The president hinted at the possibility of raising tax rates during her meeting with the leaders of the ruling and main opposition parties last week.
A more thorough and comprehensive review is needed to build a welfare scheme that is more beneficiary and still financially viable over the long term.