The members of the Democratic Party of Korea agreed to provide pandemic support to all South Korean citizens on Tuesday. “We will create a consensus by discussing with the government and the opposition party,” said the party’s leader Song Young-gil on Wednesday, pushing for pandemic support for all citizens. Some members of the party proposed the dismissal of Deputy Prime Minister Hong Nam-ki who has insisted on selective provision of pandemic support. Whether Hong will maintain his opinion against the pressure of the ruling party remains a key factor for pandemic support.
The deputy prime minister said last month that support will be focused on those who experienced damages and deficit-financing bonds will not be issued, which means that the basic principle of the second revised supplementary budget is the selective provision in consideration of financial situations. It is a reasonable opinion as a deputy prime minister in charge of the country’s finance. Certain groups, including small business owners, are experiencing bigger damages with the fourth wave of COVID-19. The stronger selective provision seems a reasonable course to take while the political circles are heading in the opposite direction.
The ruling party plans to increase compensation amount for small business owners, along with pandemic support for all South Koreans. The decision was made in consideration of the damages experienced by small business owners. Finance is the issue, however. According to the ruling party’s plan, the second supplementary budget will increase by 4.5 trillion won from its original amount of 33 trillion won. While the political circles claim that there is some room as an additional 43 trillion won was collected in taxes by May this year, the government estimates the excessive tax revenue of this year will be around 31 trillion won at the end of the year with lower tax revenue expected in the second half of the year.
The excessive increase in budget will lead to deficit-financing bonds. The ruling party is willing to spend two trillion won, which is set to pay back national debt, for pandemic support and compensation for damages. Reversing the agreement made early this year to pay back national debt will negatively affect the country’s credit rating. The government is concerned that it would be the first case where a fiscal issue directly affects the country’s credit rating. The deputy prime minister is the person to voice such concerns in the loudest volume.
Deputy Prime Minister Hong has voiced different opinions from the ruling party on multiple occasions since his appointment in December 2018, serving as the longest deputy prime minister in the history of South Korea. Some say that his record is nine games and nine losses because he folded under pressure for various issues, including the reduction of stock exchange tax, deductions for credit card transactions, and the criteria of major shareholders for transfer income tax. He maintained his position on selective provision for the fourth pandemic support but was unable to carry his point when it comes to amount.
Bureaucrat passing and populism in the political circles often went too far. However, the deputy prime minister has the duty to overcome them and manage the country’s finance soundly. Hong should not forget that it is his duty as the longest-serving deputy prime minister to keep his conviction or be willing to step down.