Image: Proposed model of a light aircraft carrier, which was nixed by the Yoon administration's budget proposal. Credit: Republic of Korea Navy.
The Yoon Suk-yeol 윤석열 administration proposed its first budget of KRW 639t (USD 469b), significantly cutting welfare programs. The budget is a 6% reduction from the previous year’s budget, making it the first reduced national budget since 2010. The Yoon administration vowed to keep the debt-to-GDP ratio in the mid-50% until 2026. (The average debt-to-GDP ratio among OECD countries is 95%.) (See previous coverage, “Penny Wise and Pound Foolish.”) The budget must be approved by the National Assembly 국회, in which the opposition Democratic Party 민주당 holds the majority.
In the government plan, employment assistance for the elderly and the youth is significantly reduced. From the program that provided jobs for low income seniors, 2.3k jobs were cut. The upper limit for the youth savings program that provided up to 6% in government matching funds was lowered from KRW 100m (USD 85k) to KRW 50m (USD 38k).
Also cut is the local currency program 지역화폐사업, a voucher that can be used in small, locally owned businesses with the aim of promoting balanced development. Democratic Party chairman Lee Jae-myung 이재명, who had strongly promoted the local currency program as a former governor of Gyeonggi-do Province 경기도, called the proposed budget “heartless 비정”.
In the defense budget, the light aircraft carrier program was cut. Yoon’s People Power Party 국민의힘 has long criticized the carrier program, a major initiative by the Moon Jae-in 문재인 administration to develop capabilities to assist the United States in its Indo-Pacific Strategy in the South China Sea. PPP Assembly Member Sin Won-sik 신원식 previously argued in 2020 that the carrier would be useless because it would “only follow around the US Pacific Fleet,” and nearly succeeded in canceling the program at the time.