The Democratic Party of Korea’s new floor leader announced that he will introduce a special legislation on providing nationwide cash handouts of 250,000 won ($183), proposed by party leader Lee Jae-myung, as the first bill of the new National Assembly. After the government declined to allocate an additional budget of 13 trillion won needed to fund universal cash payments of 250,000 won per person, the Democratic Party is attempting to pursue this initiative through direct legislation. This method allows the National Assembly to directly influence Korean citizens without going through executive enforcement or judicial procedures.
This is highly unconstitutional. Article 54 of the Constitution delegates the power of budgeting to the government, and the National Assembly’s role is to review and finalize the budget drafted by the government. Article 57 also restricts the National Assembly from increasing the budget or creating new budget items without government consent. What the Democratic Party is trying to do by passing a bill through the National Assembly without the government’s consent has only been applied in specific cases up until now, such as recovering hidden assets from former president Chun Doo-hwan. There has never been a case where government spending that affects the entire population was legislated. The Democratic Party’s attempt to legislate a nationwide subsidy, which should be allocated through the government budget, amounts to ignoring the Constitution and taking over the role of the government.
Lee and the Democratic Party claim that handing out 250,000 won in cash is “the surest way to revitalize small businesses and support people’s lives.” But they forget that fiscal expansion, which increased the money supply in the economy, led to a steep rise in inflation, stifling growth and adding pressure to people’s lives. High interest rates burden self-employed small business owners and those heavily in debt. At the same time, domestic demand remains lackluster because the government and central banks have prioritized taming inflation.
Given the circumstances, the argument that “injecting more money into the economy by issuing government bonds should bolster spending and growth” simply does not work. It goes against economic principles. The wealthy and upper middle class are not likely to increase their spending because the government hands out $183 in cash. If cash is to be distributed, it should be selectively handed out to low-income groups who need the money.
South Korea’s national debt exceeded 1,100 trillion won, and the primary fiscal deficit reached 87 trillion won last year. This is largely the result of the opposition party’s reckless fiscal management during their time in power. After consistently undermining government efforts to establish new fiscal rules, they now propose legislating nationwide cash handouts. This approach is irresponsible.
