Choo Kyung-ho and Park Chan-dae's 'First Meeting'... Conflict Over '250,000 Won Support Fund' Expected

The newly appointed floor leaders of the ruling and opposition parties are expected to clash over the legislation of the '250,000 won nationwide livelihood recovery support fund' as the 22nd National Assembly opens. Park Chan-dae, floor leader of the Democratic Party of Korea, has emphasized the need for government financial input to restore livelihoods and has announced plans to introduce the bill as his first legislative proposal. On the other hand, Choo Kyung-ho, floor leader of the People Power Party, is concerned that the supplementary budget (추경) could potentially fuel inflation, making it difficult for both sides to find common ground.

According to political circles on the 13th, the two new floor leaders will hold their first meeting since their election at the National Assembly in the morning. Choo will visit Park to discuss key issues such as the organization of the 22nd National Assembly. Attention is particularly focused on whether they will exchange views on the bill for the 250,000 won support fund.

The Democratic Party is prioritizing the 250,000 won livelihood recovery support fund as the top agenda in the 22nd National Assembly. This is based on the judgment that support for the livelihood economy is urgent due to high inflation and high interest rates following COVID-19. At the party's Supreme Council meeting that day, Park pointed out, "Loans from financial institutions to business operators have increased by more than 50% over the past four years since the COVID-19 outbreak," adding, "According to the credit rating agency NICE Information Service, as of the end of March this year, 3,359,590 individual business owners are carrying a total of 1,112.74 trillion won in loans from financial institutions."

He continued, "The high-interest rate situation persists, and real household income has decreased due to high inflation, leading to a vicious cycle of consumption slowdown, pushing many self-employed people to the brink," and criticized, "Yet the government is rejecting the Democratic Party's proposal to provide 250,000 won to all citizens to put out the urgent fire first."

In contrast, the government and the ruling People Power Party expressed concerns about the fiscal deficit caused by the supplementary budget. According to Statistics Korea, national tax revenue in the first quarter of this year decreased by 2.2 trillion won compared to the same period last year, totaling 84.9 trillion won, raising concerns about a tax shortfall for the second consecutive year. The management fiscal balance, an indicator of the country's finances, showed a deficit of 75.3 trillion won, making it difficult to pass a supplementary budget. A management fiscal balance deficit means that the government’s expenditures and future spending obligations exceed its revenue, increasing debt.

Particularly, Floor Leader Choo, who has consistently opposed supplementary budgets since serving as the first Deputy Prime Minister for Economic Affairs under the Yoon Seok-yeol administration, is likely to block the opposition's supplementary budget legislation. While serving as Minister of Economy and Finance last year, he repeatedly rejected the Democratic Party's demands for a supplementary budget citing sound fiscal management. Even in early last year, despite President Yoon Seok-yeol’s directive to "prepare measures to reduce heating costs for the middle class and low-income households" following the gas price crisis, he opposed it, arguing that including the middle class in government support would increase fiscal leakage.

Choo Kyung-ho, Floor Leader of the People Power Party (left), and Park Chan-dae, Floor Leader of the Democratic Party (right)

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The Democratic Party is reportedly considering a 'dispositive law' measure as Plan B if the government and ruling party oppose the support fund bill. The dispositive law, a special measure law promoted by the opposition, allows the National Assembly to execute legislation directly without going through the executive branch. This was publicly mentioned by Lee Jae-myung, the party leader. Last month, on a radio broadcast, he said regarding the 250,000 won support fund, "I hope we can take the most practical measures possible, even if through a dispositive law." Floor Leader Park also expressed agreement with Lee on the 7th, stating, "The opposition does not have budget allocation or execution rights, so it is reviewing this as a legislative body."

The ruling party is likely to request President Yoon Seok-yeol to exercise his right of reconsideration (veto) if the Democratic Party passes the support fund bill. Furthermore, if the dispositive law is pushed through, the ruling party is considering filing a constitutional dispute with the Constitutional Court, arguing that it clearly violates the principle of separation of powers concerning budget item allocation. The Constitution stipulates that "the National Assembly may not increase the amount of any expenditure item submitted by the government or establish new budget items without the government's consent." Choi Sang-mok, Deputy Prime Minister for Economic Affairs and Minister of Economy and Finance, also commented on the possibility of the Democratic Party's 'dispositive law,' saying, "I understand that many opinions consider it highly likely to be unconstitutional."

Experts agree on the necessity of livelihood recovery measures but express concerns about the legal procedures of the supplementary budget promoted by the Democratic Party and its potential adverse effects on inflation. Professor Choi Jun-seon of Sungkyunkwan University School of Law said, "If the 250,000 won special support is handled through a dispositive law, it could be unconstitutional as it violates the principle of separation of powers," adding, "To establish and execute a budget, the National Assembly's consent is required. Executing it immediately without consent would be judged unconstitutional, and the president would have no choice but to exercise the veto."

Professor Kim Sang-bong of Hansung University’s Department of Economics said, "Livelihood stabilization support funds without secured resources are not very effective," adding, "Even if it temporarily helps low-income groups, it could cause long-term inflation." He diagnosed, "If bonds are issued to secure funding, interest rates in the bond market will rise, eventually increasing market interest rates and making it harder for borrowers."

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