President Lee Jae-myung on Wednesday reaffirmed his commitment to an expansionary fiscal policy, warning that "we must not fall into the trap of populist austerity rhetoric that deceives the public." He stressed the need to revive the economic cycle through consumption and investment, calling for an expansionary stance in the second-half growth strategy and the 2026 budget. Attention is now turning to whether next year's budget will exceed 800 trillion won for the first time.
Speaking at a Cabinet meeting held jointly with an emergency economic review session at the Blue House, Lee said, "Our society's problem today is that money is not circulating," adding that "active fiscal policy must lay the foundation for a great leap forward in the national economy." He continued, "Multiple studies confirm that bold fiscal spending injects vitality into the overall economy," citing that "last year's livelihood recovery consumption coupons generated an additional economic effect of 430,000 won per every 1 million won distributed."
Lee's confidence in expansionary fiscal policy is backed by an analysis from the Korea Institute of Public Finance showing that 43.3% of the 13.52 trillion won in livelihood recovery consumption coupons distributed last year translated into net sales gains for small business owners. "Research has confirmed that active and strategic fiscal management can provide real momentum for the livelihood economy," Lee said. He also criticized calls for austerity, saying, "Despite these objective facts, there are voices in parts of society that keep pushing austerity like a chant. They invoke national debt as a pretext, but in reality this is an irresponsible voice telling us to stand by while people suffer."
On concerns about national debt, Lee argued, "If you look at actual national debt, it stands at about 10% of gross domestic product (GDP)." He added, "Korea has a sounder debt structure than any other country." He qualified, however, that "this does not mean spending recklessly at any time," stressing that "the government's role is to ensure a virtuous economic cycle through investment when needed."
Lee also addressed economic instability from the prolonged Middle East war. "Oil price and inflation instability continue, and public inconvenience is growing due to the odd-even vehicle rationing system," he said, while assessing that "through cooperation between the government and the people, the economy is maintaining a solid trajectory even amid crisis." He added, "The resilience of the people who overcame the IMF foreign exchange crisis and the COVID-19 crisis will be demonstrated once again," pledging that "the government will also respond pre-emptively to cushion economic shocks and restructure the industrial order."
Lee praised Industry Minister Kim Jung-kwan, who had returned from the United States after consultations on investment projects, but drew attention by urging him to "consult specifics in advance with the Foreign Ministry and the (Blue House) National Security Office, and coordinate well with other ministries beforehand." He particularly noted, "When issues span across ministerial jurisdictions, if you don't coordinate autonomously, I end up having to step in and coordinate myself." He added, "Please pay special attention and get along with each other." A senior Blue House official explained that the comments were "a call for synergy-generating cooperation alongside competition for results among ministries."
Meanwhile, Blue House Policy Chief Kim Yong-beom stirred debate by proposing an "AI national dividend." In a Facebook post the previous night, Kim wrote, "If a strategic position in the AI infrastructure supply chain creates a structural boom, and that leads to a record tax surplus, how to spend that money is a matter of design." He added, "Some of the fruits harvested from the industrial foundation built by all citizens over half a century should not be treated as the result of specific companies alone, but should be structurally returned to all citizens."
Because Kim's post conflated corporate "excess profits" and "excess tax revenue," the KOSPI briefly fluctuated during the day. The index trimmed its losses, however, as the remarks were interpreted as weighted toward "national-level utilization of excess tax revenue" rather than direct recovery of corporate excess profits.
Kim framed AI not as a mere software industry but as new industrial infrastructure closer to power grids, railways, and telecommunications networks. "AI is not simply a technology for building apps," he said, describing it as "a vast physical system connecting data centers, power grids, cooling, robotics, industrial automation, and urban infrastructure." He further analyzed that "the AI era has the potential to transform the very structure of the Korean economy." The national dividend was presented as a way to address the "K-shaped polarization" that could emerge in that process.
Some observers note that Kim's concept is also tied to a broader long-term discourse of offsetting declines in labor demand and income from AI-driven industrial expansion through a basic income.
