Lee Jae-myung, Kim Moon-soo ; Buying Votes with Debt: Who Will Be Accountable for the National Treasury?
The Hidden Costs of Sweet Campaign Promises and the Truth About National Debt Future Generations Will Bear
The Age of Unlimited Populism Competition: National Finance on the Edge
Turn on the TV or open a newspaper these days, and you'll find headlines dominated by presidential candidates' lavish promises. Amid the abundance of pledges to "give more" or "cut more taxes," serious discussions about how to finance these costs are notably absent. This recurring phenomenon during election season has reached a particularly alarming level in the current presidential race.
According to recent analyses by political circles and the National Assembly Budget Office, implementing all the major presidential candidates' promises would require astronomical financial resources. Especially concerning are the pledges made by candidates from the two major parties, which are expected to place massive burdens on national finances. The problem is that these promises are being announced without feasible implementation plans or concrete funding strategies.
South Korea has already experienced an 87 trillion won tax revenue shortfall over the past two years (2023-2024). With first-quarter negative growth this year and an annual growth forecast of only 0-1%, a third consecutive year of tax collection deficits seems inevitable. While fiscal soundness has already reached dangerous levels, presidential candidates continue to promise increased spending, ignoring this reality.
Candidate Lee Jae-myung's 100 Trillion Won Pledges: Where Will the Money Come From?
Analysis shows that fulfilling all of Democratic Party candidate Lee Jae-myung's campaign promises would require at least 100 trillion won during his term. This represents approximately one-fifth of South Korea's annual budget—an enormous sum.
Looking at his most expensive pledges:
1. Child Allowance Expansion: 41.5 Trillion Won Over Five Years
This promise would extend the current monthly allowance of 100,000 won per child aged 0-7 to all children under 18. According to Democratic Party campaign headquarters chief Yoon Ho-jung, implementing this policy would cost 8.3 trillion won annually, totaling 41.5 trillion won over five years. Considering the National Assembly Budget Office's estimate that maintaining the current system from 2025-2029 would require 11.6 trillion won, the additional fiscal requirement amounts to 29.9 trillion won.
2. Rural Basic Income: Up to 31.2 Trillion Won
Candidate Lee has promised a monthly rural basic income of 150,000-200,000 won. The Budget Office estimates that by 2026, approximately 2.6 million agricultural and fishery workers aged 18 and over would qualify. If each person receives 1.8 million won annually, the five-year cost would be 23.4 trillion won; at 2.4 million won annually, the cost increases to 31.2 trillion won in combined national and local government spending.
3. Abolition of Basic Pension Reduction for Couples: 15.2 Trillion Won
The current system reduces pension payments by 20% when both spouses receive the basic pension. According to cost estimates for the Basic Pension Act amendment pushed by Democratic Party lawmaker Kim Tae-nyeon, this policy would require an additional 15.2 trillion won over five years.
4. West Coast Energy Highway: Up to 20 Trillion Won
This project aims to transmit electricity generated from renewable energy in the Honam region to the metropolitan area. The Ministry of Industry, Trade and Energy plans to invest a total of 7.9 trillion won by 2036 to build high-voltage direct current transmission lines, but Candidate Lee has promised to advance this project by six years and expand transmission capacity to 20GW. In this case, the required budget could increase to 20 trillion won.
5. Other Pledges
Additionally, considering financial support for implementing a 4.5-day workweek and providing 250,000 won to all citizens for livelihood recovery (13 trillion won), the total fiscal requirement is expected to far exceed 100 trillion won.
Candidate Kim Moon-soo's 70 Trillion Won Tax Cut Pledges: How Will Revenue Be Secured?
People Power Party candidate Kim Moon-soo's economic pledges mostly focus on tax cuts. While tax reduction policies easily gain popularity among citizens, they also mean reduced national tax revenue. A decrease of approximately 70 trillion won in tax revenue is expected over his five-year term.
1. Introduction of Price Indexation for Comprehensive Income Tax: 31.7 Trillion Won Revenue Reduction
The National Assembly Budget Office predicts that introducing price indexation for comprehensive income tax would reduce tax revenue by 31.7 trillion won over five years.
2. Application of Price Indexation to Earned Income Tax: 30.3 Trillion Won Revenue Reduction
Applying price indexation to earned income tax would further decrease tax revenue by 30.3 trillion won.
3. Expansion of Basic Tax Deduction for Dependents: Over 20 Trillion Won Revenue Reduction
Candidate Kim has promised to double the basic income tax deduction for dependents from the current 1.5 million won to 3 million won. This is more radical than the Democratic Party's proposal of 1.8 million won. Expanding the basic deduction to 2 million won and raising the age limit of eligible direct descendants and siblings from 20 to 24 would reduce tax revenue by 26.4657 trillion won over five years. According to Kim's pledge, a tax revenue reduction of at least 20 trillion won would be inevitable.
4. Reduction of Corporate Tax Maximum Rate: Over 21 Trillion Won Revenue Reduction
Another pledge involves lowering the current corporate tax maximum rate from 24% to 21%. The Budget Office estimates that adjusting the corporate tax base and lowering the maximum rate to 22% would reduce tax revenue by 21 trillion won over five years. Candidate Kim's pledge would lead to an even greater reduction in tax revenue.
5. Construction of GTX-D·E·F Lines: Additional 30 Trillion Won National Budget
Kim has promised to commence construction of the Metropolitan Express Railway (GTX) D, E, and F lines during his term. This project would require an additional 30 trillion won in national budget beyond private investment.
The Crisis of Fiscal Soundness: A Burden on Future Generations
Both candidates are presenting pledges that require enormous financial resources, yet neither has provided concrete plans for securing these funds. This will likely result in increasing national debt.
South Korea's national debt is already growing rapidly. The national debt-to-GDP ratio, which was 36% in 2017, exceeded 50% in 2023. While fiscal expansion was unavoidable during the COVID-19 response, the rate of increase is concerning.
The problem is exacerbated by population aging and low birth rates, which will inevitably increase the burden on future generations. Currently, South Korea's population aged 65 and over exceeds 18% and is expected to surpass 25% by 2030. While the working-age population continues to decrease, welfare demands are increasing, further intensifying fiscal pressure.
In this context, irresponsible populist pledges amount to placing an unbearable burden on future generations. Politicians are promoting policies popular with current voters to win elections while transferring the costs to future taxpayers.
A Time for Voters' Cold Judgment
Elections are the flower of democracy and an important process through which citizens entrust politicians with national management. However, if these choices are based on emotions or temporary interests, they can lead to negative long-term consequences for the entire nation.
Voters should carefully examine the feasibility of candidates' pledges and their funding plans. The plan for "how to make it possible" is just as important as the promise of "what will be done."
Fiscal soundness, in particular, is the foundation of the national economy. Excessive national debt can lead to various risks, including lowered national credit ratings, increased interest burdens, and heightened possibilities of economic crisis. Through the foreign exchange crisis and the global financial crisis, we have already painfully experienced the importance of fiscal soundness.
Moreover, considering the recent global trend of interest rate hikes and uncertain economic conditions, excessive fiscal expansion could be even more dangerous. In a high interest rate environment, increased national debt also means increased interest burden, ultimately reducing resources for essential government services.
Recommendations for Sustainable National Development
What we need is not populist pledges for immediate popularity but long-term vision and plans for sustainable national development.
First, presidential candidates should present specific plans for securing financial resources for their pledges. Instead of contradictory promises like "welfare without tax increases" or "tax cuts for better living," they should present realistic and responsible plans to voters.
Second, voters should consider the long-term impact of policies rather than just immediate benefits. Particular attention should be paid to the impact of demographic changes such as aging and low birth rates on finances.
Third, our society needs more mature discussions about "taxation" and "welfare." Social consensus should precede decisions about which services the government should provide and how their costs should be shared.
Fourth, efforts are needed to reduce waste in national finance and increase efficiency. Appropriate investments should be made where necessary, while unnecessary expenditures should be boldly reduced through fiscal reform.
Conclusion: A Responsible Choice for Future Generations
Presidential elections come every five years, but their results shape our future for decades. Fiscal policy, in particular, is difficult to reverse once its direction is set.
Voters should coldly judge whether candidates' pledges are financially feasible and beneficial to long-term national development, rather than being enchanted by sweet promises.
We must be able to distinguish whether the visions presented by politicians are for immediate benefits or responsible plans that consider future generations. This is the attitude we should adopt as mature democratic citizens.
It is time to deeply consider how our current choices will affect future generations and what decisions we should make to leave them a better future rather than a burden.
"We do not inherit the Earth from our ancestors; we borrow it from our children." Remembering this age-old adage, let us all make more responsible choices.
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