Ruling and Opposition Parties Compete on Cash Handouts as Policy Meeting Excludes Acting President Choi: Concerns Over "Coupon Extra Budget"

Ruling and Opposition Parties Compete Over Cash-Based Support Measures
Concerns Rise Over "Coupon Extra Budget" and Populist Spending
National Assembly-Government Policy Consultation Proceeds Without Choi Sangmok

The National Assembly-Government Policy Consultation Meeting for National Stability, which was scheduled to be held on the 28th of last month at Sarangjae in Yeouido, Yeongdeungpo-gu, Seoul, was canceled, leaving the seat empty. Photo by the National Assembly Press Photographers Group

With the possibility of an early presidential election in May being discussed, both the ruling and opposition parties have begun competing to propose cash-based support measures worth several trillion won. On the afternoon of March 6, the National Assembly-Government Policy Consultation Meeting between the ruling and opposition parties will discuss issues such as formulating a supplementary budget (extra budget), which is a means of securing fiscal resources. However, concerns about a populist "coupon extra budget" are being raised inside and outside the government, as Choi Sangmok, Acting President, Deputy Prime Minister, and Minister of Economy and Finance, who is responsible for national fiscal management, has been excluded from the discussions.

According to political circles and the government, on the afternoon of March 6, Kwon Seongdong, floor leader of the People Power Party, and Park Chan-dae, floor leader of the Democratic Party, will hold a National Assembly-Government Policy Consultation Meeting chaired by National Assembly Speaker Woo Won-shik. Initially, a tripartite meeting involving both parties and the government, including Acting President Choi, was planned for February 28. However, the Democratic Party declared it would not participate, stating that it could not recognize Acting President Choi as a dialogue partner due to his refusal to appoint Ma Eun-hyeok as a Constitutional Court justice nominee, resulting in the cancellation of the meeting.

One of the main agenda items for the National Assembly-Government Policy Consultation Meeting is the formulation of a supplementary budget. Both parties have recently announced a series of cash-based support pledges, premised on passing a supplementary budget. The Democratic Party is pushing for a 13 trillion won "Livelihood Recovery Consumption Coupon" program to provide 250,000 won per person to the public. The People Power Party has also announced measures such as a 1 million won energy voucher for each small business owner, a prepaid card worth up to 500,000 won per person, and a 2 million won voucher for micro-business owners.

The problem lies in the fiscal burden. With tax revenues likely to fall short again this year due to weakened export and domestic demand, an excessive supplementary budget could undermine the fiscal foundation. While an extra budget could help secure tax revenues by accelerating economic recovery, if too much of the supplementary budget is allocated to cash support with a low fiscal multiplier, it could result in a situation where "money is spent but no effect is seen."

Amid these concerns, there is growing unease inside and outside the government about holding the National Assembly-Government Policy Consultation Meeting without Acting President Choi. A government official stated, "If a supplementary budget is passed in the current atmosphere, it is likely to become a 'coupon extra budget' focused on cash handouts rather than supporting industries such as artificial intelligence (AI). The government remains cautious about populist support measures."

The timing of the supplementary budget is also an issue. Even if the ruling and opposition parties agree immediately, it will be difficult to implement a so-called "cherry blossom extra budget" this spring, especially since the government, which has the authority to draft the budget, is not participating in the discussions, making it hard to speed up the process. A government official pointed out, "Even if the ruling and opposition parties agree on an extra budget, the authority and know-how to draft the budget lie with the government. If the meeting is held without the government, it is questionable how it differs from the usual meetings between the floor leaders of the two parties." A People Power Party official also said, "If the ruling and opposition parties agree on part of the supplementary budget, the ruling party can coordinate with the government. However, it seems unlikely that any concrete discussions will take place today."

At the policy coordination meeting held at the National Assembly on the same day, floor leader Park stated, "The National Assembly-Government Policy Consultation Meeting between the ruling and opposition parties is scheduled for this afternoon, and we will discuss the supplementary budget and pension reform from the public’s perspective. As proposed by the Democratic Party, a 30 trillion won supplementary budget is necessary to see any real effect."