Budget Bill Behind the Scenes...'Democratic Party's 4.1 Trillion Won Cut' Passed in Plenary Session [Why&Next] (Comprehensive)

On the afternoon of the 10th, the Democratic Party of Korea passed a budget bill worth 673.3 trillion won in the plenary session of the National Assembly. This marked the unprecedented passage of an opposition party's budget reduction bill alone. The ruling and opposition parties and the government repeatedly negotiated until just before the bill was submitted to the plenary session but ultimately failed to reach an agreement. The government proposed increasing the regional currency budget on the condition of restoring the contingency fund and national treasury bond interest, but the talks broke down as they could not agree on the scale. The additional 700 billion won cut proposed for the Presidential Office and others, which had been mentioned by some, was not discussed.

A revision to the 2025 budget was approved at the plenary session held at the National Assembly on the 10th. Photo by Kim Hyun-min

First-ever Opposition Party's Sole Budget Reduction Bill Passed in Constitutional History

According to the National Assembly and the Ministry of Economy and Finance on the 10th, the Democratic Party finalized next year's budget at 673.3 trillion won, cutting 4.1 trillion won from the government's submitted budget (total expenditure) of 677.4 trillion won. This reflected only reductions without any increases, marking the first time in constitutional history that the opposition party alone passed a budget reduction bill. As passed by the Democratic Party in the Budget and Accounts Committee on the 29th of last month, special activity expenses for the Presidential Secretariat and the National Security Office, as well as the contingency fund and national treasury bond interest repayments, were cut.

The revenue budget (total income) was also slightly reduced. Total revenue was cut from 651.8 trillion won in next year's budget proposal to 651.6 trillion won. According to the Ministry of Economy and Finance, this was due to adjustments in the special postal business account revenue budget generated from the post office's mail and parcel delivery business. A ministry official explained, "The mail and parcel delivery business has been declining recently, and the non-tax revenue was slightly reduced following criticism that it was overestimated."

Prime Minister Han Duck-soo and Deputy Prime Minister and Minister of Economy and Finance Choi Sang-mok are talking after the amendment to the 2025 budget bill was passed at the plenary session held at the National Assembly on the 10th. Photo by Kim Hyun-min

The situation changed moment by moment during the budget negotiation process until the bill was submitted to the plenary session. From 4 p.m. on the 9th, a closed-door budget negotiation was held with participants including Kim Yoon-sang, 2nd Vice Minister of Economy and Finance, Jin Seong-jun, Policy Chief of the Democratic Party of Korea, and Heo Young, Budget and Accounts Committee secretary. There were expectations that the Democratic Party would not submit the budget bill, considering the burden of unilaterally proposing a budget reduction bill.

Conventionally, after the ruling and opposition parties finish reduction discussions with the Ministry of Economy and Finance in the Budget and Accounts Committee, they negotiate increases and agree on the budget bill to be submitted to the plenary session. The National Assembly modifies the budget bill with the Ministry of Economy and Finance, which has the authority to increase the budget. While the National Assembly can reduce the government budget bill, increases or new budget items require government consent. However, the Democratic Party passed a budget bill with only a 4.1 trillion won reduction and no increase in the special committee last month on the 29th.

Therefore, during the negotiations starting on the afternoon of the 9th, it was expected that the process of revising the budget bill to be submitted to the plenary session would include discussions on increases. On the morning of the 9th, Democratic Party spokesperson Hwang Jeong-ah also stated before the negotiations, "We plan to review and negotiate the government's increase proposals." It is reported that increase plans and other matters were also mentioned and discussed during the negotiation process. However, it was impossible for the ruling party to engage in substantive budget negotiations amid the impeachment crisis, and the government alone could not negotiate on equal footing without the ruling party, leading to the breakdown of negotiations around midnight. It seemed that the Democratic Party solidified its direction to submit the budget bill as is to the plenary session.

Re-negotiations Initiated at Deputy Prime Minister Choi Sang-mok's Request... Failed to Agree on Regional Currency Budget and Others

Then, on the morning of the same day, Deputy Prime Minister and Minister of Economy and Finance Choi Sang-mok visited National Assembly Speaker Woo Won-sik and proposed an increase plan again, restarting negotiations. Kim Sang-hoon, Policy Chief of the People Power Party, and Jin Seong-jun, Policy Chief of the Democratic Party, canceled a scheduled budget press conference, raising expectations for re-negotiations. The Ministry of Economy and Finance demanded restoration of 1.8 trillion won of the contingency fund unilaterally cut by the opposition, restoration of 500 billion won for national treasury bond interest, and proposed reflecting 400 billion won for regional currency and 300 billion won for national treasury support for free high school education.

Last-minute negotiations continued until just before the plenary session. Democratic Party lawmaker Heo Young said, "The government's proposal was absurd, so we made a revised proposal," and added, "We told them to bring it back by 2 p.m. (to the Ministry of Economy and Finance)." However, the negotiations ultimately broke down as they failed to agree on the scale of the increase in the regional currency budget. Democratic Party lawmaker Jin Seong-jun said, "The Democratic Party maintained the position that if the reduced budget is to be restored, the scale of restoration should be matched by an increase in the livelihood budget," and added, "The Ministry of Economy and Finance did not accept this position, and the People Power Party also did not agree, leading to the final breakdown of budget negotiations."

Choe Sang-mok, Deputy Prime Minister for Economic Affairs and Minister of Economy and Finance, is entering the National Assembly on the 10th to attend the full meeting of the Planning and Finance Committee. Photo by Kim Hyun-min

The Additional 700 Billion Won Cut for the Presidential Office Was Not Discussed

The additional 700 billion won cut for the Presidential Office's project expenses, mentioned by some on the 9th, was not included. According to multiple officials, this matter was not discussed during the budget negotiations between the government and the ruling and opposition parties after 4 p.m. on the 9th. A Democratic Party official said, "The additional cut was never officially announced as party policy," and added, "It was not officially discussed at all." The Ministry of Economy and Finance also stated that it had not received detailed information on the 700 billion won cut from the Democratic Party and that no such additional discussions had taken place.

The possibility of the first-ever 'quasi-budget' formation in constitutional history, which had briefly emerged, was quickly dismissed. Since the Democratic Party could unilaterally submit the budget bill to the plenary session, the utility of a quasi-budget, which only allows basic budget execution, was not high. A government official at the time said, "Additional discussions on the scope of the quasi-budget as defined by the National Finance Act are necessary, but (from the Democratic Party's perspective) there is no reason to do so." If a quasi-budget is formed, only basic budget execution is possible to maintain minimum government functions, such as civil servant salaries, national treasury bond interest, and national pension. However, detailed additional discussions on the extent of 'minimum government function maintenance' need to be conducted.

The Democratic Party has formalized plans to prepare a supplementary budget (Chugyeong). They intend to draft budget requirements based on the reduced budget and prepare additional budgets for further needs around early to mid-January next year. Park Chan-dae, the Democratic Party floor leader, emphasized on the day, "If there are parts that need increases for livelihood and economic recovery, they can be resolved later through supplementary budgets or other means."