Gyeonggi Gov. Choo Mi-ae leaves the funeral hall at Soonchunhyang University Bucheon Hospital in Bucheon, Gyeonggi, on Oct. 17 after paying her respects to a firefighter who died in a fire at a paint factory in the city.NEWS1
Lee Hyun-sang
The author is a columnist at the JoongAng Ilbo.
Gyeonggi Gov. Choo Mi-ae faced criticism after comparing firefighting services to a "fiscal straw" sucking up government funds. She eventually apologized, but her remark, "I apologize because you want an apology," raised questions about her sincerity.
The comment was inappropriate, but her underlying argument is understandable. Although firefighters became national government employees, local governments still shoulder most personnel costs. Choo was demanding greater central government funding for a nationally administered service.
More interesting is her transformation. Last month, she criticized former Gov. Kim Dong-yeon for issuing local bonds and tapping government funds, arguing that expansionary spending was inappropriate when fiscal restraint was needed.
A prominent Democratic Party politician accustomed to advocating expansionary fiscal policies has become a guardian of provincial finances. Has administrative responsibility made her more conscious of where money comes from? One cannot help asking: How does it feel to manage the household finances yourself?
Political rhetoric differs from administrative accounting. Politicians emphasize reasons for spending, while administrators must weigh costs and priorities. Choo has hardly become an austerity advocate, but recognizing the weight of financial responsibility would be welcome.
President Lee Jae Myung should understand this distinction. Shortly after becoming Seongnam mayor in 2010, he declared a debt moratorium, saying the city could not immediately repay money borrowed from Pangyo's special account.
Critics called it political theater by a newly elected mayor exaggerating fiscal difficulties. Nevertheless, Lee subsequently restructured spending and declared the moratorium over. He has experienced the challenges of managing local finances.
Yet his administration's proposed budget for next year totals a record 821 trillion won ($570 billion), up 12.8 percent from this year's original budget.
Higher tax revenues generated by the semiconductor boom underpin this expansion. The government describes the spending as investment in growth engines and reducing inequality. The fiscal balance is also expected to improve substantially.
But rising revenue does not justify unlimited spending.
The semiconductor boom cannot last forever. Additional tax revenue may be temporary, while spending commitments are difficult to reverse. Even the government's medium-term fiscal plan projects that the managed fiscal balance, after improving next year, will deteriorate again. By 2030, the deficit is expected to approach 3 percent of GDP.
Should temporary revenue gains become permanent spending obligations? Before introducing new expenditures, the government should consider how much national debt it could repay.
The proposed 162 trillion won "future response fund" raises similar questions. The government plans to invest 45 trillion won in young people, growth industries, regional development and education, while allocating 12.5 trillion won to reducing government bond issuance. Another 104 trillion won would remain available for investment and management.
Preparing for future challenges and economic downturns is necessary. But with national debt continuing to rise, is holding more than 100 trillion won in a fund the best approach?
The opposition's description of the fund as the president's "personal piggy bank" reflects concerns about weakened parliamentary oversight. Could more debt be reduced by comparing returns on the fund's assets with interest costs on government bonds?
France offers a warning. Amid chronic deficits and political instability, yields on its 10-year government bonds have recently approached 5 percent, their highest level in more than two decades. The yield spread over German bonds has widened to nearly 1.4 percentage points.
Higher borrowing costs increase interest payments, leaving less money for welfare and investment.
This does not mean Korea faces an imminent French-style crisis. But austerity becomes considerably more costly after fiscal credibility has been lost.
Borrowing to sustain spending during recessions may be necessary. When tax revenues surge, however, reducing debt should be the priority. Fiscal responsibility is not the exclusive preserve of conservatives.
Choo's controversial remark may fade after her apology, but the underlying fiscal problem remains.
Plenty of politicians promise more spending. Few explain where the money will come from or when debts will be repaid.
Expenditures that seem manageable on someone else's books suddenly become burdensome when responsibility shifts to one's own. Choo, Lee and politicians across the political spectrum should remember that lesson.
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
