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[Editorial] Inappropriate assistance

Moon government’s latest coronavirus relief package swayed by populist temptation again

The government last week unveiled plans to draw up a fourth supplementary budget this year to help cushion the economic impact of the prolonged novel coronavirus crisis.

During an emergency economic council meeting Thursday, President Moon Jae-in described the proposed extra budget worth 7.8 trillion won ($6.57 billion) as a disaster relief package tailored to concentrate support on the businesses and individuals that have suffered the most damage from the pandemic. He noted such an approach was an inevitable choice to maximize the effect of relief measures with limited fiscal means.

He seemed to have in mind the criticism of the government’s decision in May to provide up to 1 million won in emergency relief money to all households in the country regardless of their income and wealth levels.

Still, it is hard to say the latest relief package to be funded mostly by issuing state bonds is devoid of populist characteristics.

For instance, it has set aside 930 billion won to give 20,000 won to each person aged 13 or older to help them pay for their monthly communication expenses, including smartphone service fees, in September. The number of beneficiaries from the proposed subsidy reaches 46.4 million, or more than 90 percent of the country’s total population of 51 million.

Moon described the communication subsidy payment as a “small bit of consolation from the government” for all people suffering difficulties amid the coronavirus pandemic.

His remark sparked criticism that he was regarding taxpayers’ money as his own.

Government officials say the subsidy is needed because people are compelled to pay more communication fees as noncontact activities have soared in the wake of the coronavirus outbreak. But data on household spending shows payment of communication fees actually declined 2 percent from a year earlier in the second quarter of this year.

The fourth extra budget bill, which was submitted to the parliament Friday for approval, also allocated 3.8 trillion won to provide support for small merchants and self-employed people, 1.4 trillion won to help stabilize employment and 1.1 trillion won in child care assistance.

But discontent is growing among many individuals excluded from cash payouts.

Owners of some entertainment establishments are angry with their exclusion from the relief package, saying they are suffering the greatest reduction in income due to the toughened social distancing rules.

The measure to give households 200,000 won per preschool and elementary school child has caused disgruntlement from parents whose children attend middle or high school and unmarried people.

Critics say this backlash should be seen as signaling the Moon government’s populist policy is beginning to boomerang to it.

But the administration and the ruling Democratic Party of Korea seem to be paying little heed to such warnings. Rather, they are poised to further increase cash payouts down the road.

Rep. Hong Ik-pyo, the head of a think tank run by the ruling party, recently raised the need to give yet another batch of emergency funds to all people in the first half of next year if the coronavirus situation remains unabated through the period.

With no end to the pandemic crisis in sight, his suggestion is tantamount to a declaration of further cash payouts in time for next April’s mayoral by-elections in Seoul and Busan -- the two biggest cities in South Korea.

Ruling party officials concede that the pledge to provide relief money to all households helped the party win a landslide victory in the parliamentary elections earlier this year. During the campaign, the ruling party pressed the administration’s fiscal policymakers to step back from their original plan to offer emergency funds to families earning less than the median household income.

A larger amount of cash payouts may be given or promised to people ahead of the presidential election in 2022.

Over Moon’s five-year presidency, the country’s national debt is forecast to increase by 400 trillion won to exceed 1,000 trillion won, accounting for more than 50 percent of gross domestic product. It would be hard to roll back populist programs under the next administration and beyond, with the country set on a path to a continual deterioration of fiscal soundness.

Sensible voters now have to question whether they should continue to be pandered to by irresponsible fiscal spending funded by debt issuance that must be paid for by future generations.
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Korea Herald daum