[Editorial] Budget bill dispute

The National Assembly, which failed to meet the Dec. 2 constitutional deadline for passing the administration’s 2013 budget bill, has recently rescheduled a vote on the bill for Friday.

However, the ruling Saenuri Party, which has the National Assembly under its control, will still find it difficult to pass the bill on Friday in the face of strong resistance from the main opposition Democratic United Party. The key stumbling block is the ruling party’s demand to increase the 2013 spending by 6 trillion won to finance some of President-elect Park Geun-hye’s campaign promises.

During the run-up to the Dec. 19 election, the opposition party proposed 3 trillion won to 4 trillion won in additional spending next year, which it said the next president would need to implement some of his or her urgent election promises. The ruling party rejected the proposal. But the tables were turned when Park Geun-hye of the Saenuri Party was elected president.

Few would say the opposition party is principled when it says it is against the proposed spending increase. Nonetheless, its opposition merits serious consideration by all stakeholders.

First of all, President Lee Myung-bak’s administration, the mandated author of the budget bill, is opposed to the proposal for a spending increase. One day after the presidential election, Bahk Jae-wan, minister of strategy and finance, said the budget bill needs to be approved in its original form, adding that the Korea Development Institute, a government-funded think tank, finds few problems with the budget request.

The National Assembly needs to obtain consent from the administration if it is to increase the 2013 spending as demanded by the Saenuri Party. But the party is exerting undue pressure when it is calling on a reluctant Lee administration to endorse a 6 trillion won spending increase.

A better alternative is for the Saenuri Party to pass the bill this time, after making minor adjustments if necessary, and draw up a supplementary budget bill next year if it is deemed necessary. The party would be misguided to attempt to hold the outgoing Lee administration accountable for a spending increase it had not requested.

Another problem with the proposed spending increase is that it would create an additional budget deficit. According to an estimate by the party, the deficit would range from 1 trillion won to 1.5 trillion won.

That would put a new burden on the Lee administration, which said it strived to reduce the budget deficit to a bare minimum when it submitted the 2013 budget bill in early October ― to 0.3 percent of the gross domestic product, or 4.8 trillion won. Should spending be increased by 6 trillion won, the deficit would probably expand to 6 trillion won or more.

To the chagrin of the Lee administration, this would not be the end of the story. Economic think tanks are predicting the Korean economy would not grow as fast next year as the administration projected when it was submitting the budget bill to the National Assembly. A lower rate of growth would mean a decline in tax revenues.

The Korea Development Institute and some other renowned think tanks revised the administration’s forecast of 4 percent growth downward to 3 percent or lower. This would cause another loss of up to 2 trillion won in tax revenues, which would deal a devastating blow to the Lee administration, which had repeatedly committed itself to balancing a budget by 2013.

A party that elected its candidate to the presidency would be more responsible if it made public its growth estimate and presented its timeline for a return to a balanced budget before calling for an increase in spending. But the Saenuri Party, which had taken no such action, called for an addition 6 trillion won in spending. It was little different from demanding the Lee administration to backtrack on its commitment to a balanced budget.

What the ruling party needs to do is drop the demand and agree with the opposition party to pass the budget bill with minor changes, if they are deemed necessary, before the end of the 2012 fiscal year. Then it may choose to draw up a comprehensive five-year economic management plan, prioritize President-elect Park’s election promises and write a supplementary budget bill next year. It should be reminded Park is president-elect, not president, and should behave as such until she is sworn in on Feb. 25.