Bipartisan agreement leads to passage of 728 trillion won budget

The Democratic Party and the People Power Party agreed on the 728 trillion won ($547 billion) budget for next year on December 2 and passed it during a plenary session of the National Assembly. This is the first time in five years, since 2020, that lawmakers have met the legal deadline for approving the budget. The two parties reached a compromise by adjusting some items while keeping the total government-proposed spending intact. Both the ruling and opposition parties now face the challenge of using the newly approved budget, passed without major conflict, to spur economic recovery and growth.

The finalized budget maintained funding for the government’s key initiatives, including the regional gift certificate program and the National Growth Fund, as originally proposed. Some allocations, such as support for artificial intelligence, were reduced, while increases requested by the opposition, including funding for national scholarships, were added. The tax reform plan features a compromise capping taxes on dividends from high-dividend companies at 30 percent, as agreed by both parties. However, the government’s proposal to raise the corporate tax rate by one percentage point passed unilaterally despite opposition from the minority party, leaving the measure open to controversy.

Despite these issues, the bipartisan approval of next year’s budget is significant because it demonstrates the National Assembly carrying out its core function of reviewing and passing the budget. Last year, following emergency measures on Dec. 3, the opposition at the time, the Democratic Party, passed the budget alone for the first time amid intense partisan confrontation. The National Assembly’s next task is to monitor whether the budget achieves its intended results and to provide support through legislation if needed.

The most urgent task is to fully implement the “People’s Livelihood Economic Council,” agreed upon by the president and party leaders in early September. The council was established to advance shared election pledges, including youth employment, the abolition of the breach-of-trust law, and the revitalization of local construction projects.

However, the council has yet to take its first steps, as the initial meeting scheduled for mid-September was canceled for political reasons. Key issues that should have been addressed, such as exempting R&D personnel in the semiconductor sector from the 52-hour workweek, have not been properly discussed.

Meanwhile, economic uncertainty has risen. The Bank of Korea projects growth rates of 1.0 percent this year, 1.8 percent next year, and 1.9 percent in 2026, marking three consecutive years of low growth around 1 percent. To reach the government’s 3 percent potential growth target, businesses and citizens need confidence that current policies will continue, but political conflicts are heightening public and corporate anxiety. The budget’s approval offers lawmakers an opportunity to fully activate the People’s Livelihood Economic Council and address issues affecting citizens’ daily lives.