Policy Evaluation Research Institute: "Lee and Kim's Pledges Are Unplanned Populism... National Debt Will Soar"

Lee: 202.5% Increase, Kim: 195.3% Increase
"Both Candidates' Pledges Lack Planning and Are Populist"

Democratic Party presidential candidate Lee Jae-myung (left) and People Power Party presidential candidate Kim Moon-soo greet each other ahead of the 21st presidential election candidates debate hosted by the Central Election Broadcasting Debate Commission at the KBS studio in Yeouido, Yeongdeungpo-gu, Seoul on the 23rd. Photo by the National Assembly Press Photographers Association

According to a simulation of policy models conducted by the private policy research institute, the Policy Evaluation Research Institute, both candidates' pledges would result in a significant increase in national debt.

On May 26, the Policy Evaluation Research Institute reported the results of a simulation using the "Nara Salim Game," a Korean adaptation of the Fiscal Ship Game developed by the Brookings Institution in the United States.

The institute stated, "According to the model, the pledges of Democratic Party candidate Lee Jaemyung and People Power Party candidate Kim Moonsoo would lead to a surge in national debt and significantly increase the burden on the younger generation." The institute added, "As of 2055, the national debt (measured by the D1 national debt-to-GDP ratio) would increase by 202.5% if Lee's pledges are implemented, and by 195.3% if Kim's pledges are implemented."

Lee's pledges reflected in the model include gradually expanding the eligibility for child allowances up to age 18, introducing a basic income for farmers, and abolishing the reduction of basic pensions for couples.

Kim's pledges reflected in the model include lowering the top inheritance tax rate (from 50% to 30%), lowering the top corporate tax rate (from 24% to 21%), increasing the basic income tax deduction (from 1.5 million won to 3 million won), introducing an inflation-indexed income tax system, and introducing an automatic adjustment mechanism for the National Pension.

The institute explained, "Currently, only a portion of the pledges presented by both candidates are reflected in the Nara Salim Game. If all pledges were to be applied, the burden on future generations would increase exponentially."

The institute also added, "Neither candidate properly estimates the funding sources for their pledges, and both provide only a very brief explanation of how they would secure the necessary funds. This lack of specificity, feasibility, and planning amounts to populism."

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