Reckless welfare pledges to buy votes

If the main opposition Democratic United Party wins in this year`s general and presidential elections, the younger generation will likely roll in dough. The party announced Thursday that it will dole out 12 million won (10,733 U.S. dollars) per person to young people who do not attend university after graduating from high school. The money is equivalent to halving university tuition for those who advance to higher education. The party also pledged 500,000 won (447 dollars) a month for two years to those who have jobs to augment their wages and 250,000 won (224 dollars) a month for four years to jobless high school graduates to assist their job search. Those who start their own business can receive a lump sum of 12 million won. In addition, the party offered to pay 6.3 million won (5,635 dollars) to those who serve in the military by depositing 300,000 won (268 dollars) per month for 21 months. The payment will be made in a lump sum at the time of discharge.

The question is where all of this money will come from. The opposition party simply announced that the 12 million won offered to young people who do not attend college will be covered by 2 trillion won (1.79 billion dollars) in funds raised by depositing 0.5 percent of corporate tax revenue every year. The proposed welfare policy would cost 33 trillion won (29.52 billion dollars) a year -- 17 trillion won (15.21 billion dollars) for free school lunches, free childcare services, free medical treatment and halved tuition, and another 16 trillion won (14.31 billion won) for job creation, housing and welfare for the underprivileged. The combined amount is equal to about 10 percent of this year`s national budget of 326 trillion won (291.59 billion dollars).

The party claimed that its welfare proposals will be feasible without issuing state bonds or levying new taxes if the tax burden is increased from 19.3 percent to 21.5 percent by imposing more taxes on the wealthy. In addition, the party claims that more money can be raised by reforming fiscal spending, the welfare system and taxation. In essence, such proposals are makeshift plans. This year, the Seoul Metropolitan Government had to cut the budget for talent cultivation and school support to raise money for free school lunches. Considering the limited budget, handing out cash to all young voters will put the underprivileged and elderly, who are in need of help, on the backburner in budget prioritization. The National Assembly Budget Office said in a report late last year that medical security and subsistence-level welfare benefits to the underprivileged are the most urgent in budget prioritization. Opposition party leader Han Myeong-sook said youth welfare is more important than other issues because "young people`s despair will put the entire country into despair." The true nature of the party`s welfare initiatives, however, is to win votes in the upcoming elections.

The ruling party, which has just renamed itself the Saenuri (New World) Party, has criticized its opposition rival for pursuing "welfare populism," but is also busy competing with its opponent`s universal welfare proposals. To dole out cash to almost all of the electorate, someone has to earn money to pay taxes. How can economic actors such as corporations endure such a situation? Making young people more independent trumps giving them money. If the welfare competition empties state coffers, Korea might go the way of Portugal, Ireland, Greece and Spain in heading toward the verge of national bankruptcy.