Populist cash handout policies by the political sector

As objections are being filed from those who have been excluded from the recipients of the country’s fifth emergency relief funds, which were intended to be handed out to people in the bottom 88 percent income bracket, the ruling Democratic Party said it will increase the scope of beneficiaries to 90 percent. “The biggest challenge is to take measures so that those who are on the borderline are not unfairly excluded from the beneficiaries’ list,” said Park Wan-joo, chief policymaker of the ruling party. The country needs additional 300 billion won in budget if the recipients of the cash handout are expanded by 2 percentage points.

The idea of a fifth cash handout, which provides 250,000 won per recipient, came from President Moon Jae-in’s remarks made in February that if the country’s about to get out of the woods, the government will review providing cash handouts in order to give a boost to the people. The cash handouts were initially subject to the bottom 70 percent income bracket, but the ruling party insisted on was expanding the scope to 80 percent. After DP Chairman Song Young-gil and main opposition People Power Party Chairman Lee Jun-seok flip-flopped on the issue of providing the fund to the entire public, they have decided to be more generous to dual-income and single-person households, and provide the funds to the bottom 88 percent income bracket as a result. There has been no rational reason on why the cash handouts are being handed out to the bottom 70, 80, or 88 percent income bracket.

As many as 54,000 cases of objections have been filed with the Anti-Corruption & Civil Rights Commission after people could find out if they were eligible for the payment from this week. There are many complaints about each household’s national health insurance payments being the standard for the eligibility. Households with more working members are at a disadvantage because the health insurance payments of each family member are combined. There are cases, where people with slightly higher salaries living in jeonse houses are not eligible for the relief funds while wealthy homeowners, who have less income after retirement, are eligible for the funds. This is why the ruling party again increased the scope of recipients to 90 percent for fear of widespread public anger.

In fact, much of the confusion stems from the fact that the political sector and Cheong Wa Dae provided the first round of disaster relief funds to the entire public through political bargaining ahead of the April 7 general election last year. Amid the unprecedented COVID-19 pandemic, which provided an opportunity to give cash to the public, the ruling party insisted expanding the scope of recipients against the criteria set by the Ministry of Economy and Finance and even the opposition party, ahead of the election, demanded that the handouts be given to the entire public.

If the scope of recipients was limited to the bottom 20 percent or 30 percent income bracket from the beginning, and each recipient were given two to three times more cash as a result, the effect of income preservation would have been higher and the burden of national debt would have been reduced. Politicians preoccupied with votes have left people who are not eligible for the cash handout feeling neglected by giving money to those who do not really need it. Populist policies by politicians, who are no better than the owners of mom-and-pop stores, are driving the public into confusion.