Lee Jae-myung Government Breaks Fiscal Discipline to Target 30% Approval Rating

Correlation Between Lee Jae-myung Administration's Pivot to Expansionary Fiscal Policy and 30s Support Drift

The Lee Jae-myung administration has pivoted to aggressive fiscal expansion, breaking the framework of fiscal soundness. President Lee recently asserted during a Cabinet meeting that it is not time to be buried in managing immediate fiscal figures, ordering a drastic shift to a "productive fiscal strategy." This is interpreted as a withdrawal of the government's initial emphasis on maintaining fiscal health, signaling a determination to mobilize all available government resources to stimulate the economy and execute state affairs. In particular, as the President personally defined numerical management as a "mistake," a major overhaul of budget compilation guidelines for the Ministry of Economy and Finance and other economic ministries appears inevitable.

The prevailing analysis is that this shift in policy stance is not unrelated to the administration's recent decline in public approval. According to recent opinion poll indicators, President Lee Jae-myung's positive performance rating is trapped in the 30% range, and notably, there is a pronounced exodus from his core support base: people in their 30s. This demographic is sensitive to changes in the real economy, and their disappointment is interpreted as a response to the government's passive fiscal management amidst persistent high inflation and high interest rates. Consequently, this declaration of expansionary fiscal policy is read as a high-stakes gamble underpinned by politically calculated judgment to recover the lost support of the younger generation by improving the perceived economy through fiscal expansion.

Aggressive Investment Toward Mega-Regional Projects and Northern Sea Route Development

The Lee Jae-myung administration has set large-scale state projects, including three major mega projects and the development of the Northern Sea Route, as specific targets for fiscal expansion. According to an analysis by Mediascan, the government has included the Northern Sea Route development as one of 123 state tasks and plans to concentrate budget on infrastructure investment and technology development for this purpose. This is a strategic move to go beyond simply expanding logistics networks to securing future energy resources and seizing the initiative in the restructuring of global supply chains. Additionally, the attempt to increase housing supply speed by dispersing urban renewal project powers previously held by the Seoul Metropolitan Government to the central government and autonomous districts is also evaluated as a measure to maximize the efficiency of fiscal investment.

The push to relocate financial authorities to the provinces is another key task being pursued under the expansionary fiscal stance. The plan involves relocating the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) to promote balanced regional development and breathe vitality into the stagnant local economy. These policy moves are seen as an attempt to appease regional public sentiment calling for an easing of concentration in the capital region while solidifying the support base in the provinces. However, voices within the financial sector still express concerns about a decline in expertise and network disconnects, leaving the government with the task of designing additional financial incentives to persuade them.

Strengthening Internal Control Through Police Reform and Ruling Party Cohesion

President Lee Jae-myung is simultaneously accelerating efforts to establish public service discipline and reorganize internally, parallel to the external fiscal expansion. At a recent Cabinet meeting, the President strongly criticized the lax discipline and irresponsibility of the police force and instructed the establishment of a police reform agency under the Prime Minister's Office. This is seen as an expression of intent to directly control the bloated police organization following the adjustment of investigative powers and to quell public opinion deteriorated by controversies over poor investigations. In particular, the instruction for a thorough investigation into the Jang Mi-ran incident is interpreted as a severe warning that failures in the field of public safety will not be tolerated.

In the political sphere, there are also signs of closer cooperation between the ruling party and the government to overcome the crisis in approval ratings. President Lee invited key Democratic Party leaders, including new leader Kim Min-seok and floor leader Han Byung-do, to the Blue House for a dinner meeting lasting 2 hours and 20 minutes. It is known that the President emphasized the necessity of expansionary fiscal policy at this meeting and requested full cooperation in the budget process. As Kim Min-seek recently solidified his position within the party by recording 15.7% suitability for the next presidential candidate in opinion polls, it is a crucial time for the President to secure a strategic partnership with the party leadership to maintain governing momentum.

Controversy Over Fiscal Soundness and Uncertainty in the Next Presidential Race

Market reactions to the aggressive fiscal expansion policy are mixed. While short-term economic stimulus effects are expected from increased government spending, there are concerns about a decline in sovereign credit ratings due to rising national debt ratios in the medium to long term. In particular, President Lee's policy stance—emphasizing that housing is an essential public good, not a speculative tool, strengthening Jeonse loan regulations, and pouring finances into housing supply—could be a factor increasing volatility in the real estate market. If expansionary fiscal policy stimulates inflationary pressure, it cannot be ruled out that it may clash with the Bank of Korea's monetary policy and cause confusion in the market.

The future outlook depends on how quickly the results of expansionary fiscal policy appear in indicators. If the employment environment and housing conditions for people in their 30s do not improve despite massive budget input, the government is likely to suffer from the double burden of criticism for destroying fiscal soundness and stagnant approval ratings. The fact that 63% of the public demanded the President not to run for office in the event of a constitutional amendment in an NBS opinion poll suggests that the political burden currently felt by the government has reached a critical point. Attention is focused on whether the aggressive fiscal policy card, a high-stakes gamble thrown by President Lee, will serve as a catalyst for a rebound in approval ratings or remain a blunder passing on massive debt to the next administration.