Controversy over Release of National Bonds Worth Seven Trillion Won

On August 9, the Uri Party insisted that the government should issue national bonds worth seven trillion won next year in order to restore the domestic economy and to fulfill the party’s public pledge.

However, the Grand National Party disagreed with the fiscal expansion policy, which restores the economy by releasing more money. Instead, the Grand National Party suggested a tax reduction policy to restore the economy. Therefore, controversy is rising over conflicting economic restoration plans between the ruling and the opposition parties.

Hong Jae-hyung, the Uri Party’s Policy Planning Committee chairman, held a special joint press interview with floor leader, policy committee, and economy committee members in the Assembly’s press room, and said, “Next year’s budget, according to estimates by the government, will be about 130 trillion won, and it will have limits to stir up the frozen domestic economy. Because it is forecasted that next year’s economy will also be difficult, the government should actively participate to boost the economy.”

Hong said, “We will request the government invest in areas which can greatly help economic recovery such as investments in social overhead capital, support for small firms, investment in research and development, and investment in education.”

A main official of the Uri Party said, “The government’s plan is to issue national bonds worth three trillion won so that the total budget will be 130 trillion won. However, the party’s plan is to issue national bonds worth seven trillion won so that the total budget will be about 134 trillion to 135 trillion won.”

The Uri Party plan suggests financial support to create jobs, financial support for small firms, including marginal firms, the enlargement of the budget for research and development, investment in social overhead capital, and investment in education. The plan will be presented in detail at a conference between the party, Cheong Wa Dae, and the government, which will be held in mid-August.

However, Lee Han-gu, the head of the Policy Planning Committee of the Grand National Party, held a press interview and suggested a tax cut, saying, “The fiscal expansion policy, which have been continued since the Kim Dae-jung administration, virtually failed. The economy should be restored through extensive tax cuts.”

Lee pushed for tax relief by proposing temporarily exempting income tax and tax audits for three years, the encouragement of entrepreneurship by giving privileges to producers, and the retrenchment of the government’s current expenses to the government.

Young-Hae Choi In-Jik Cho yhchoi65@donga.com jyw11@donga.com