hankyoreh

A sign reads “Save Daegu” in the city’s February 28 Central Memorial Park on Feb. 26, when the number of novel coronavirus cases in the region exceeded 1,000. (Kim Il-woo, Daegu correspondent)

On Mar. 10, a National Assembly review began in earnest for a supplementary budget plan of 11.7 trillion won (US$9.8 billion) submitted by the government for an economic response to the novel coronavirus and support for associated losses. Meanwhile, amid serious livelihood concerns for vulnerable population segments and growing fears of a global economic recession as the virus spreads, politicians and experts have been discussing approaches such as increasing the supplementary budget’s scale, introducing a “basic disaster income,” and drafting a second supplementary budget.

The National Assembly’s Public Administration and Security Committee and other standing committees held a plenary meeting on the morning of Mar. 10 to begin a review of the supplementary budget plan by the individual committees’ presiding ministries. The ruling and opposition parties plan to conclude their supplementary budget review quickly – in just over a week -- to pass the plan at the plenary session scheduled for Mar. 17, the final day of the National Assembly’s extraordinary session.

But the review process is expected to run into some roadblocks, with the United Future Party (UFP) raising issues about the suitability of the 3.2 trillion won (US$2.68 billion) tax revenue supplement within in the 11.7 trillion won budget, along with the issuance of “vouchers” to members of low-income segments as a way of boosting domestic consumption. Lee Jong-bae, a UFP lawmaker and secretary on the National Assembly Special Committee on Budget and Accounts, said the tax revenue supplement “sends the message that we’re ultimately going to increase the national debt because of predictions of a tax revenue shortfall.”

“We need to assess the efficacy of providing different forms of vouchers,” Lee argued. He went on to say that he would be raising issues during the supplementary budget review process over areas such as emergency caregiving assistance for infants and improvements to the medical system, including increased disease prevention mask availability and measures to address the shortage of hospital beds. His message was that even with the budget review scheduled in the short space of just over a week, he intended to submit the plan to intense scrutiny.

But many in and around the National Assembly are arguing that if anything, the scale of the supplementary budget should be increased. In contrast with the situation when the government was putting the budget plan together, fears of a global novel coronavirus pandemic threatening the international economy are becoming a reality. An example of this is the demand from Korea Chamber of Commerce and Industry Chairman Park Yong-maan, who stressed that “we are facing an unprecedented situation with industries suffering losses on all sides” and insisted that “we will need close to 40 trillion won (US$33.5 billion) to undo the damage to the growth rate as a result of the coronavirus.”

In a telephone interview with the Hankyoreh, Hong Ihk-pyo, a lawmaker who serves as the Democratic Party’s secretary to the Public Administration and Security Committee, said, “[The budget] is about the same scale it was for the MERS [Middle East Respiratory Syndrome] outbreak, but the economic repercussions this time are incomparably larger.”

“The supplementary budget scale will need to be at least 25 trillion won,” Hong suggested.

Countries around the world are starting to form the consensus that the economic fallout from the virus will require large-scale fiscal expenditures. China’s Yunnan Province and six other local governments previously announced plans for a large-scale investment of some 25 trillion yuan (US$3.6 trillion) to overcome losses associated with the coronavirus. The governments of Italy and Hong Kong are also putting together emergency budgets to respond to the virus.

Politicians and others are also calling strongly for experimentation with new policy measures such as a basic disaster income.

On Mar. 10, Seoul Mayor Park Won-soon said that he was “proposing that the government quickly introduce emergency disaster benefits of 600,000 won [US$501.90] each to all households below the median income that are not entitled to existing institutional benefits such as basic livelihood security or unemployment pay.” He estimated that the income support plan would cost some 4.8 trillion won (US$4.02 billion).

Justice Party leader Sim Sang-jeung suggested, “If it’s too much to provide it to everyone nationwide all at once, we should pay a basic disaster income of 1 million won [US$836.49] per person in Daegu and North Gyeongsang Province.” The remarks show that calls for introducing a basic disaster income have been intensifying since the idea was proposed previously by Gyeonggi Gov. Lee Jae-myung and South Gyeongsang Gov. Kim Kyoung-soo.

But the ruling Democratic Party and administration are maintaining that the priority for now is passage of the supplementary budget plan presented to the National Assembly. Lee In-young, the party’s floor leader, shrugged off calls for a major increase in the supplementary budget, although he added, “If the standing committees and Special Committee on Budget and Accounts expand the scope of disaster support and an increase in the amount of assistance becomes a reality, we’ll ask the administration to actively accept that.”

“Right now, timing is the most important thing. We can’t afford to have the passage of the supplementary budget delayed by discussions of an expansion that it will be difficult to reach an agreement on,” he stressed.

When asked by Sim at the National Assembly that day for his position on a basic disaster income, Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki replied, “It has been considered by the administration as well, but while it has various advantages, there are also a lot of issues, and I don’t know it will be easy to reach an agreement on it.”

In the wake of what some have called a “tweezer supplementary budget” that does not go beyond providing assistance to those suffering losses, many are suggesting that possibility of a large second supplementary budget should be opened up. This is seen as a more realistic perspective in light of the short supplementary review period of just over one week.

“Once we are facing a crisis on the supply side, it will be difficult to anticipate an economic rebound through fiscal support at the current scale,” predicted Joo Sang-young, a professor of economics at Konkuk University.

“We should be focusing on supporting those who have suffered losses through the emergency supplementary budget, while anticipating the possibility of a second supplementary budget later on,” he suggested.

Hong Ihk-pyo said, “With a supplementary budget of this scale, there’s inevitably going to be talk of a second supplementary budget.”

By Noh Hyun-woong, Kim Won-chul, and Lee Kyung-mi, staff reporters

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