Opposition leader criticizes gov't cash handouts scheme; president rejects 'populist' label

President Lee Jae Myung and ruling Democratic Party of Korea Chairman Jung Chung-rae, left, react as main opposition People Power Party Chairman Jang Dong-hyeok speaks during a meeting at Cheong Wa Dae in Seoul, Tuesday. Yonhap

Main opposition People Power Party (PPP) Chairman Jang Dong-hyeok warned on Tuesday, that a plan for cash handouts in the government's latest supplementary budget bill could stoke pressure on inflation and the exchange rate.

In response, President Lee Jae Myung rejected criticism that the policy was populist, saying it will help offset economic strains resulting from high oil prices amid the Middle East conflict.

They exchanged views during a meeting that also involved ruling Democratic Party of Korea (DPK) Chairman Jung Chung-rae at Cheong Wa Dae in Seoul. It was the first meeting between the three since last September.

Jang agreed on the need for the extra budget. Nevertheless, he disagreed with the cash support for the bottom 70 percent of Korea’s income earners, for which 4.8 trillion won ($3.19 billion) is allocated as part of the total 26.2 trillion won budget. The aid is aimed at helping people cope with rising energy costs and other expenses amid the prolonged U.S.-Israel war with Iran. The bill was endorsed by the Cabinet and now awaits parliamentary approval.

The PPP chairman said he had “serious concerns” about the budget in light of the high cost of living and the Korean currency weakening against the U.S. dollar, which has breached the worrisome threshold of 1,500 won per dollar.

“Support should be provided where it is truly needed. However, if the approach is to give cash to 70 percent of the population, it could instead have a negative impact on inflation and the exchange rate,” he said. "Short-lived joy (of receiving money) can lead to long-term pain."

Lee rejected Jang's claim. “This is by no means a populist policy," he said. "Describing it as simply ‘dispersing cash’ seems a bit much.”

The president added, “These tax revenues must be used for the people, and we want to spend the money in a fair and rational manner, as it comes from the hard work of citizens.”

The PPP leader argued that the supplementary budget, although needed, “cannot resolve the difficulties in the economy and people’s livelihoods on its own.”

He went on to say that some spending plans run counter to the budget’s purpose, pointing to 4.9 billion won earmarked to support TBS, a public broadcaster once associated with controversial liberal-leaning journalist Kim Ou-joon, and 30.6 billion won for a program he said transports luggage for Chinese tourists.

Jang, however, left the door open for cooperation, saying “If the government adjusts its policy approach, the opposition will cooperate as well.”

The president said the ruling and opposition parties can discuss and adjust items that the PPP deems "unnecessary."

He called on them to work together to overcome the crisis caused by the Middle East situation. “Internal unity is extremely important during difficult times like these,” Lee said.

The DPK chairman agreed with the president, saying, “The National Assembly pushes to pass the supplementary budget at the fastest pace in history, and I ask the opposition party to cooperate with us.”

Meanwhile, the president sought support from the opposition party for the government and the ruling party’s constitutional reform drive. The reform scheme includes granting the Assembly stronger power to approve or lift martial law and upholding a pro-democracy spirit. If the Assembly passes the reform bill by May 10, a referendum for the constitutional amendment can be carried out together with the June 3 local elections.

"Constitutional revision is impossible without the PPP's help, and I ask that you engage in discussion positively,” Lee said. Passage of a constitutional amendment requires two-thirds approval from the Assembly, which would need support from around 10 of the 107 PPP lawmakers.

In a post-meeting briefing, the PPP said that Jang demanded the president “preemptively declare to the public that he will not seek a second or consecutive term before discussing constitutional amendments.”

Jang's demand came even though the proposed constitutional reform bill does not include changes to the nation's presidential system, which allows single five-year term, although there had been calls for changes to multiple four-year terms.

According to the PPP, upon Jang's demand, Lee did not immediately say he would make such a declaration. Cheong Wa Dae explained later, "The president told Jang that amending the Constitution for multiple presidential terms is impossible because the PPP's opposition will make it impossible to reach quorum for it."