(EDITORIAL from Korea Herald on April 21)
-Candidates have not estimated costs of pledges nor offered ways to raise funds-
Major presidential candidates have announced a barrage of election promises to increase welfare without offering ways to raise funds.
They have pledged cash allowances to older people, young job seekers and parents with children.
Such pledges are worrisome in that they may strain government finances because it is difficult to cut allowances once they begin to be paid out, and the amount tends to keep rising.
According to the calculations made by a local media outlet Wednesday, most candidates from the five parties did not estimate the costs of their welfare pledges. Their cost estimates totaled 9 trillion won ($7.8 billion) per year and 46 trillion won over the five-year presidential term.
Moon Jae-in of the Democratic Party of Korea pledged to raise the basic pension for older people in the bottom 70 percent income group from 200,000 won to 300,000 won per month. He estimated the total cost of the pension at 4.4 trillion won per year. Child care allowances and young jobseeker’s allowances totaled 2.6 trillion and 540 billion won per year, respectively.
Moon, however, has not come up with ways to pay for all this.
Ahn Cheol-soo of the People’s Party vowed to use 800 billion won annually to raise the upper limit of wages for paid child care leave, but did not estimate the costs of welfare benefits for the elderly and youth.
Hong Joon-pyo of the Liberty Korea Party pledged to double child care allowance and give 150,000 won in allowance to every elementary, middle and high school student from families with less than the median income each month. He did not estimate the costs nor outline how to raise the funds.
Yoo Seong-min of the Bareun Party promised to increase unemployment benefits and child care allowances, but he did not estimate the costs, either.
Sim Sang-jeung of the Justice Party offered the most generous welfare benefits among the five candidates. She said she would raise 63.9 trillion won through tax increases.
Their competing welfare pledges indicate that the candidates are well aware of the paucity of welfare programs and that they share the view that it is necessary to expand benefits.
But the lack of practical ways to raise funds for an increased welfare budget makes it difficult for them to avoid the criticism that they are populists.
Campaign pledges without cost estimates and feasible funding proposals will likely end up as empty promises or impose a burden on state finances if they are carried out.
The candidates spoke vaguely of how to raise welfare funds.
Hong said he would integrate similar or overlapping welfare programs and reprioritize fiscal expenditures. However, he said he would not seek to raise taxes.
Ahn said he would use part of the existing budget for job creation and reprioritize spending.
It is understandable they did not have enough preparation time because the election has come earlier than expected, but their lack of clarity on how they will carry their pledges out give the impression that they were extemporized.
Korea’s welfare expenditures accounted for 9.7 percent of its gross domestic product in 2014, far below 21.1 percent, which was the average for the Organization for Economic Cooperation and Development. Welfare is the right direction for Korea to go, but a rapid increase is feared to put a strain on government finances. The accumulated government debt topped 600 trillion won last year.
Promises, even hopeful ones, had better not be made if the possibility of them being kept is questionable. Honeyed pledges lacking ways of implementation may cloud voters’ judgement.
In fact, welfare without tax hikes is nearly infeasible unless the economy continues to grow. Simply reprioritizing expenditures has limits in funding increased welfare benefits.
Efforts to make society less polarized through the redistribution of wealth are the spirit of the times, but attempts to redistribute more and more wealth with low or no economic growth are risky.
Pledges without means are unreliable. Candidates should clarify how to fund their welfare pledges.