Analysis of President Lee Jae-myung's First State of the Union Address

Walking the Path of Fair Growth and Practicality

South Korea is currently at a significant turning point. Amid the triple challenges of high inflation, high interest rates, and high exchange rates, domestic demand is frozen, export recovery is delayed, and economic growth rates have continuously stayed in the 0% range. This economic crisis is not just a matter of statistical indicators but a reality felt in the weight of people's lives and daily routines. President Lee Jae-myung delivered his first state address in the National Assembly plenary session on June 26 against this backdrop, outlining the government's direction and philosophy for economic recovery and public welfare, as well as specific policies. This address was a comprehensive declaration of a practical state philosophy aimed at moving toward a 'new South Korea,' going beyond a simple budget explanation.

A New Vision for Fair Growth

President Lee Jae-myung mentioned his inauguration oath at the National Assembly on June 4th in the opening of his speech, reaffirming his commitment to creating a country where the people are the masters, where everyone lives well together, and where culture flourishes and peace prevails. Alongside this, the president conducted a strong diagnosis of the current low-growth structure and the vicious cycle of livelihood crises that South Korea is facing. He noted that if low growth persists, the doors of opportunity will narrow, which could lead to intensified competition and conflict, resulting in a social crisis. The core philosophy the president presented as a solution to overcome this crisis is "fair growth." Fair growth not only aims for economic growth but is also premised on sharing its results and easing polarization and inequality through a distribution structure. Through this, the president proposed a socially integrative economic vision to create "a world where everyone lives well together."

Investment-focused priorities and normalization of the capital market

The need for the normalization of the capital market was also emphasized. The goal of realizing the KOSPI era of 5000 through a transparent and fair market signifies not just the rise of the index, but the restoration of trust in our economic system as a whole. Furthermore, it was announced that there will be an expansion of national-level investments in advanced technologies such as AI and the semiconductor industry, as well as an energy transition centered on renewable energy and the promotion of the bio and cultural industries to establish new growth engines. In terms of diplomacy, a pragmatic approach was also declared. It was made clear that the country will actively respond to the changing international order, including trade and supply chains, through a pragmatic diplomacy centered on national interests, without being constrained by ideological divisions. The economic vision based on peace was likewise emphasized, with the phrase 'peace is rice, and peace is the economy' symbolically highlighting that peace must be a prerequisite for the stability of people's daily lives.

Response to Economic Crisis: 30.5 trillion won Supplementary Budget Plan

President Lee Jae-myung expressed that the current crisis situation faced by South Korea is 'serious,' emphasizing that the government has no choice but to take immediate and substantial action. The president explained that the economy is facing a real crisis based on various indicators such as economic recession, contraction of domestic demand, reduced purchasing power of the middle class, increasing debt among self-employed individuals, and a surge in youth unemployment and business closures. To address this, the president has proposed a supplementary budget plan amounting to 30.5 trillion won, through which he aims to establish four pillars: recovery of domestic demand, promotion of investment, stabilization of people's livelihoods, and financial normalization.

Consumption Stimulus Policy for Recovery of Livelihood

First, a budget of 11.3 trillion won has been allocated for consumption stimulation. Among this, consumer recovery coupons worth approximately 13 trillion won will be distributed to the entire population, with 150,000 won per person and a maximum of 520,000 won, aiming to restore consumption capacity and revitalize domestic demand. In particular, the differentiated design that provides more support to vulnerable groups and areas facing population decline can be seen as a way to achieve equitable growth. This also includes an additional issuance of local love gift certificates worth 8 trillion won and an increase in the discount rate.

Investment and support for revitalizing the economy

Secondly, a budget of 3.9 trillion won has been allocated to promote investment for economic revitalization. The plan is to accelerate the implementation of executable social overhead capital (SOC) projects such as railroads, roads, and ports, and to supply liquidity of 5.4 trillion won to the stagnant real estate PF market to stimulate the construction sector. Additionally, an investment of 1.3 trillion won in a fund for AI, renewable energy, and venture firms will be carried out concurrently.

Public livelihood stability policies and support

Third, 5 trillion won has been allocated for the stabilization budget to directly support small businesses, self-employed individuals, and vulnerable groups. It includes policies for practical recovery, such as the cancellation of debts for 1.13 million people who have been in long-term arrears for over seven years, interest reductions and extended installment repayments for those currently repaying debts, and increased support funds for business closures. Additionally, 1.6 trillion won has been earmarked to strengthen employment security nets through the expansion of unemployment benefits and the national employment support system.

Tax revenue adjustment for restoring fiscal health

Fourth, an adjustment of tax revenue amounting to 10.3 trillion won has been included, focusing on restoring fiscal soundness. The government has proposed a principle of responsibly managing the budget, taking into account the cumulative tax revenue shortfall of 80 trillion won from 2023 to 2024, while readjusting revenue without any irregularities or loopholes. This can lead to the establishment of a foundation for future local financial stability and the sustainability of livelihood projects.

Transition to a New Society and the Politics of Pragmatism

President Lee Jae-myung went beyond simple policy explanations to convey a clear message regarding the social direction and values that South Korea should pursue. He presented a vision of a "predictable and rational society" and a "society where adhering to rules does not result in loss," calling for the restoration of common sense and fairness. The consistent context of his speech was the need to create a structure where anyone can achieve success through legitimate effort, rather than relying on vested interests and privileges. He acknowledged that such changes are bound to involve suffering, yet expressed the inevitability of reform and the determination to put it into practice with the phrase, "We must clear away the debris to sow seeds."

Cooperation between the ruling and opposition parties and a practical approach to national governance

The President emphasized that we can overcome any crisis through the strength and solidarity of our great people, stating that it is time to change together and move forward together. He stressed that this philosophy of governance should be principles applied regardless of political factions and requested cooperation from both the ruling and opposition parties. The message that there cannot be separation between the ruling and opposition parties when it comes to revitalizing the economy and people's livelihoods is not merely rhetorical, but rather a declaration of a governance policy based on practical cooperation for future policy implementation.

Conclusion: The First Step for a Real Republic of Korea

The presidential address by Lee Jae-myung transcended a simple explanation of the additional budget proposal it was a declarative speech that diagnosed the economic crisis facing South Korea and outlined a direction for moving towards a new society under the principles of practicality and fairness. The president stressed the importance of timing in overcoming the crisis, emphasizing that now is the golden time. He promised that the government would do its utmost to protect the lives of the people based solely on a practical spirit, opening new paths for economic recovery and growth. He called for cooperation from the National Assembly and the public, emphasizing that solidarity and action beyond political divisions is the key to creating a 'real South Korea.'