The Budget Battle Kicks Off in the National Assembly... 'A Clash Between Austerity vs Expansion'

Yoon Jae-ok "Expansionary Fiscal Policy Only Fuels Inflation"
Lee Jae-myung "Simple Logic That Can't Print Money Because Prices Rise
Cannot Solve Complex Economic Issues"

The ruling and opposition parties have begun a power struggle over next year's national budget, which amounts to 657 trillion won. The People Power Party is working to defend the budget proposal for next year in line with the government's fiscal soundness policy, while the Democratic Party of Korea emphasizes expansionary fiscal policy to revive the economy and plans to increase the budget for research and development (R&D) and local currency, which the government has drastically cut, making this year's National Assembly budget review expected to be difficult.

The National Assembly's Special Committee on Budget and Accounts held a plenary meeting on the 3rd and began reviewing the 2024 budget proposals for economic ministries. The review of the economic ministries' budget proposals will be conducted over two days from the 3rd to the 6th, covering 27 agencies including the Ministry of Economy and Finance, Ministry of Science and ICT, Ministry of Land, Infrastructure and Transport, National Tax Service, and Korea Communications Commission.

The Democratic Party is preparing for a large-scale budget increase, arguing that the government should invest fiscal resources in 'investment' and 'stimulating consumption' to revive the sluggish economy. On the other hand, the People Power Party counters that "claiming fiscal expansion while talking about the hardships caused by high inflation and high interest rates is full of contradictions."

On the 3rd, Yoon Jae-ok, floor leader of the People Power Party, at a party strategy meeting held at the National Assembly, responded to Democratic Party leader Lee Jae-myung's press conference the previous day advocating budget expansion, saying, "Implementing expansionary fiscal policy under the current circumstances will only further fuel inflation," and "For most people, the pain of the high-inflation era is much greater than the sweetness of receiving cash support." He pointed out that the current high inflation is a result of expansionary fiscal policies during the COVID-19 pandemic, explaining that countries around the world are maintaining a high interest rate stance to cope with inflation, and international financial organizations are advising fiscal tightening.

Yoon Jae-ok, floor leader of the People Power Party, is speaking at the floor countermeasure meeting held at the National Assembly on the 3rd. Photo by Kim Hyun-min kimhyun81@

He added, "Suggesting to loosen taxes further under the pretext of public suffering without thinking about ways to end the high inflation as soon as possible is a claim worse than a bait-and-switch," and defended the government budget by saying, "The reason the government selectively increased budgets for small business owners, youth support, and welfare while maintaining a sound fiscal policy in this year's budget is to uphold the basic fiscal policy of 'income redistribution' without fueling inflation." He also warned, "If the Democratic Party does not abandon fiscal omnipotence and politically motivated budget increases, this year's budget review will inevitably face great difficulties," and urged, "Do not try to undermine the government's sound fiscal policy and make reasonable proposals within the possible range."

Lee Jae-myung, leader of the Democratic Party of Korea, is speaking at the Supreme Council meeting held at the National Assembly on the 3rd. Park Jeong-hyun attended the meeting for the first time. Photo by Kim Hyun-min kimhyun81@

Meanwhile, the Democratic Party is demanding ▲an increase in the local currency budget ▲more than doubling the budget for the Korea Fund of Funds ▲an increase in the budget related to renewable energy ▲a public-private cooperative interest rate reduction program ▲a 30,000 won pass for youth public transportation ▲relief of interest burden on jeonse loans ▲expansion of monthly rent deduction targets ▲a one-year temporary 'temporary consumption tax credit' to boost domestic demand ▲and relief of gas and electricity charges for small business owners.

At a press conference the previous day, Lee criticized the Yoon Suk-yeol administration's economic policy stance of fiscal tightening and proposed budget expansion including these points. At the Supreme Council meeting held at the National Assembly that morning, Lee said, "The core of people's livelihood is the economy," and criticized the government and ruling party, saying, "The simple idea that we cannot release money because it will raise prices cannot solve the complex economic phenomena."

Lee also emphasized again the 'pursuit of achieving a 3% growth rate for the recovery of the people's economy' mentioned the previous day, saying, "Recovery of the growth rate is important." The previous day, Lee said, "If we adjust policy priorities and mobilize all crisis overcoming measures, recovering a 3% growth rate is entirely possible," and added, "The government must take the lead." He continued, "To achieve a 3% growth rate, a 'dual engine' to revive the economy is needed," suggesting 'investment' and 'stimulating consumption.'

On the same day, Lee said, "We need to put our heads together and have a dialogue to recover at least 3% growth," and added, "If the government and ruling party lack confidence, the Democratic Party will present concrete policy alternatives anytime. If there is willingness, let's have a dialogue and start discussions for achieving 3% growth recovery."

This content was produced with the assistance of AI translation services.