[Inside Chodong] Chu Kyung-ho as 'Legislator' and Chu Kyung-ho as 'Deputy Prime Minister'

Deputy Prime Minister for Economy Choo Kyung-ho attended the plenary meeting of the Planning and Finance Committee held at the National Assembly on the 17th and presented an explanation of the supplementary budget proposal. Photo by Yoon Dong-joo doso7@

On June 23 last year, in the National Assembly's Planning and Finance Committee meeting room, the supplementary budget (추경) became a hot topic at the end of the review of bills submitted to the plenary session. This was when the Moon Jae-in administration was preparing a second supplementary budget plan using excess tax revenue without issuing deficit bonds. The supplementary budget funds amounted to about 30 trillion won in excess tax revenue. At that time, Representative Chu Kyung-ho of the People Power Party raised several issues with Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki.

First, he asked, "You said tax revenue increased by about 32 trillion won until April. Will you revise the revenue estimates in this supplementary budget?" Revenue revision is a measure to adjust revenue forecasts when national taxes are collected less or more than expected. When Deputy Prime Minister Hong answered "Yes," Representative Chu further inquired, "Have there been cases where the annual tax revenue forecast was revised and revenue estimates adjusted based on April or May actual results?" As a seasoned economic bureaucrat who passed the 25th Administrative Examination and served as the 1st Vice Minister of the Ministry of Economy and Finance, Representative Chu certainly knew the answer.

Representative Chu, who firmly believes that when excess tax revenue occurs, priority should be given to repaying national debt according to the National Finance Act, persistently pointed out, "Just because about 30 trillion won more is coming in, it doesn't mean a deficit budget suddenly turns into a surplus budget. It is neither appropriate from a macroeconomic policy perspective nor from fiscal management to not consider reducing the 104 trillion won debt (deficit bonds) and instead spend everything as is."

He also criticized the Moon administration's expansionary fiscal stance and national debt management capabilities. Representative Chu sharply criticized that forming a supplementary budget with excess tax revenue to increase fiscal spending is excessively reckless even considering the COVID-19 economic response, and that macroeconomic policy is fueling the deterioration of fiscal soundness as the era of 5000 trillion won in national debt dawns.

While some argue that the base interest rate should be raised, he expressed concern whether it is appropriate for fiscal policy to go further in an expansionary manner, like pouring fuel on inflation, and whether this creates a discordant combination in macroeconomic policy.

Reading Representative Chu’s remarks recorded in the National Assembly minutes, many points strangely overlap with the 60 trillion won supplementary budget plan released just three days after the inauguration of the Yoon Seok-youl administration. Concerns about fiscal soundness and inflation stimulation are similar. The situation where politics overwhelms the economy also resembles the past. The main difference is that the stance has completely reversed from opposition to ruling party, and from legislator to deputy prime minister.

The first economic team of the Yoon government, which submitted the supplementary budget to the National Assembly on the 13th, relied almost entirely on excess tax revenue exceeding 50 trillion won as the supplementary budget funds. They estimated that national taxes would be collected more than expected and decided to increase and revise the budget accordingly to use it as supplementary budget funds. However, this differs by more than 5 trillion won from the National Assembly Budget Office’s excess tax revenue estimate of 47.8 trillion won. If, as the Budget Office predicts, tax revenue such as corporate tax decreases due to worsening economic conditions in the second half of the year, the plan to repay 9 trillion won in government bonds will inevitably face difficulties. Since the COVID-19 unexpected variable, supplementary budgets totaling 62.4 trillion won (averaging 15.6 trillion won per session) were prepared in four rounds in 2020, and 50 trillion won (averaging 25 trillion won per session) in two rounds last year.

This is not about fiscal spending for COVID-19 affected groups. The principle and conviction of Representative Chu at the time?that the government and National Assembly, regardless of party, should not recklessly spend taxpayers’ money?must be equally applied during his tenure as deputy prime minister.