President Moon Jae-in said Friday that the government should consider distributing “morale-boosting” or “consolation” money to all the nation’s people once the coronavirus crisis ends.
Moon raised this idea in a meeting with the leaders of the Democratic Party of Korea in response to a suggestion that COVID-19 relief be provided to the whole nation.
His remarks came as the party and the government were still discussing the fourth round of relief payments. They agreed in principle to offer it selectively to microenterprises.
In effect, Moon suggested a fifth round of COVID-19 relief for all the nation’s people, though he did not call it that.
On a radio program the same day, Prime Minister Chung Sye-kyun hinted at the possibility of a fifth round of relief payments, saying the government could offer it broadly depending on the situation and if needed to stimulate the economy.
The party and Cheong Wa Dae appear poised to offer money to all the people no matter what, on the pretext of COVID-19.
The party plans to push through a revised supplementary budget bill next month and to start the fourth round of relief payments immediately. The last payments would be made just days before the April 7 by-elections to choose the next mayors of Seoul and Busan.
A similar scene took place before the general elections on April 15 last year. At that time, the ruling party promised 1 million won ($903) in COVID-19 relief for each family of four shortly after the general elections. It made the relief program its election pledge, effectively telling voters that if they elected its candidates, they would receive cash. The Democratic Party and its satellite party won a large majority, 180 seats, in the 300-seat National Assembly. After the elections, the party leadership actually acknowledged that the relief plan had influenced the outcome.
The party reportedly pressed Deputy Prime Minister and Minister of Finance and Economy Hong Nam-ki to draw up an extra budget of more than 20 trillion won for the fourth round of relief payments. Hong is said to have insisted on a limit of 12 trillion won.
The government spent 22.1 trillion won on coronavirus bailouts last year, but the effects of that spending are in doubt. According to Statistics Korea, income disparities worsened in the last quarter of 2020. The income ratio between the top 20 percent bracket and the bottom 20 percent bracket rose to 4.72 in the last quarter of last year, from 4.64 a year earlier. People in the bottom 20 percent saw their income decrease 13.2 percent on average, while those in the top 20 percent enjoyed an increase of 1.8 percent.
The ruling party seeks to distribute the fourth round of relief before the by-elections, and it is now talking about a fifth round after the by-elections. The national debt was 660 trillion won in 2017 when the Moon administration was launched. The Finance and Economy Ministry estimates that it will rise to 956 trillion won this year and 1,070 trillion won next year. But if the fourth round of COVID-19 relief is paid as planned and followed by a round of morale-boosting money, the figure could exceed 1,000 trillion won this year.
When it comes to coronavirus relief, Moon praises the ruling party and the government for achieving good results. They act big with cash relief, but future governments and future generations will have to tighten their belts to cope with the increased debt.
The by-elections are taking place because of sexual harassment allegations against two mayors who belonged to the ruling party. Though the party’s constitution did not allow it to field candidates for posts vacated by its own members for shameful reasons such as sexual misconduct, it revised its constitution and its nomination race is going on. And it is dangling cash in front of voters on the pretext of coronavirus relief. It is even pushing a special bill to change the location of a proposed airport, without a proper feasibility study, apparently to win over voters. The airport project is estimated to cost more than 10 trillion won.
The ruling party and the government give little attention to the deteriorating situation of the nation’s finances. They are pushing for a costly new airport and speaking of a generous injection of morale-boosting money after the fourth round of coronavirus relief. This trend toward ever-worsening election populism must be checked, but it seems there is no way to stop it.