Pledge competition in Seoul mayoral race

Na Kyung-won, the ruling Grand National Party candidate for Seoul mayor, said, “If I`m elected, I will cut more than 4 trillion won (3.43 billion U.S. dollars) of the debts of the Seoul Metropolitan government and city-invested entities by 2014.” Her main opponent Park Won-soon, an independent who is leading the race according to opinion polls, has pledged to slash 7 trillion won (6 billion dollars) of debts if elected. The two candidates have admirably promised debt reduction but if the pledges are feasible and consistent with their other pledges are unknown.

The Dong-A Ilbo confirmed with the Seoul government on Monday that the capital has debts of 3.82 trillion won (3.26 billion dollars) and city-invested entities 15.79 trillion won (13.4 billion dollars) for a combined debt figure of 19.61 trillion won (16.8 billion dollars). In a broader sense, the debts, which include deposits for rent and pre-sale contracts, amount to 25.54 trillion won (21.8 billion dollars) -- 4.98 trillion won (4.26 billion dollars) for the city and 20.56 trillion won (17.5 billion dollars) for city-invested entities.

Seoulites will elect a new mayor in the Oct. 26 by-election for a term of 32 months that will end in June 2014. To keep their debt reduction pledges, Na should cut at least 1 trillion won (856.9 million dollars) and Park 2 trillion won (1.71 billion dollars) each year in public debts. The country, provincial or municipal government can reduce debts only if tax revenue is increased or spending is cut.

Na has pledged to build 50,000 units of public rental housing and Park 80,000 units. Both candidates also promised to set a minimum living standard. They have a different take on free school lunches, however. Park has promised free school meals for all public school students in Seoul by 2014, while Na has proposed the gradual introduction of a free meal program that considers the level of household income. To keep all these pledges, the Seoul government will have to raise spending instead of cutting it.

On how she will cut debts, Na suggested tough structuring such as cutting projects for show and a delay in the schedule of projects. Park wants to cut civil-engineering works for show and raise revenue from rent using the city’s assets. They could decrease the city`s debts to a certain degree but it is doubtful if they can reduce as much debt as they have promised. Scrapping existing projects or reducing the size of new projects could have a negative impact on the city`s economy. Their rhetoric of cuts in the financial deficit and more welfare spending might sound great but will be hard to carry out. If nothing changes, the overheated pledge competition will definitely lead to negative side effects.