To Recover Economy, How to Boost Domestic Demand?

The ruling and the opposition party had a promising political dispute after a long time of disagreement. They agreed that the domestic demand must be increased to recover the economy. However, while the ruling party and the government urged for the expansion of the national budget expenditure, the opposing party insisted on the tax reduction.

New Millennium Democratic Party: Rep. Kang Woon-Tae, the chairperson of the policy planning committee 2, asserted yesterday that ``the economic revival policy does not mean the abandonment of the business restructuring policy. The purpose of the policy is to acquire of the economic growth power by promoting the measures of the domestic demands as well as to accelerate the restructuring process.``

The revised supplementary budget (5 trillion 55.5 billion won) and the unemployed budget (5 trillion won) will be utilized for the additional need of about 10 trillion won for the economic recovery instead of obtaining a loan or issuing national bonds. Therefore, NMDP argues that the policy is not a pork-barreling policy.

In terms of the tax reduction policy, Rep. Kang remarked, ``We agree to the tax reduction policy in general. However, the implementation of the tax reduction policy must be reconsidered. While the tax reduction takes time to be effective for the domestic demands promotion, the reduction of the tax revenues is prompt. On the contrary, the national budget is better for the concentrated expenditure where it is demanded.``

Grand National Party: Rep. Kim Mahn-Jae, the chairperson of the policy committee, said that ``the national budget would rather not intervene into a market. It would be better to increase the currency in the market by the tax reduction.`` The economic promotion by the expansion of the budget expenditure would be a burden over the national budge in a long run. Lim Tae-Hee, the chairperson of the policy planning 2, was also worried about the deficit of the national budget by the increased expenditure.

Rep. Ahn Taik-Su, secretary of the Finance and Economy Committee of the National Assembly, indicated that ``the core problem of the current economic crisis is that the business circle has postponed their investments, distrusting the economic policies of the government.``

Yoon Jong-Koo jkmas@donga.com