Following a meeting in May last year about a month ahead of the presidential election, President Lee Jae-myung had lunch with former Chairman Kim Chong-in in July last year, shortly after taking office. The gathering was reportedly an occasion where former Chairman Kim mainly offered advice on economic issues, and President Lee listened.
Former Chairman Kim said he was someone who truly wished for the success of the Lee Jae-myung administration. To me, having interviewed him every few months, that truly seemed to be the case. This was also evident in interview content conducted early this year and right after the June local elections.
<From SBS 'Discovery of Knowledge' in January>
Reporter Jeong Yu-mi:
When will we be able to hear your evaluation of the Lee Jae-myung administration?
Former Chairman Kim Chong-in:
At least a year has to pass to evaluate it, doesn't it?
Reporter Jeong Yu-mi:
Let's talk about it again after a year passes. How do you feel about it so far?
Former Chairman Kim Chong-in:
I think it has done relatively well so far.
Reporter Jeong Yu-mi:
Hearing you say that sounds like high praise to me.
Former Chairman Kim Chong-in:
I think President Lee Jae-myung already has a relatively good understanding of how to perform presidential duties more effectively while looking at our country's current political situation.
<From SBS 'Discovery of Knowledge' on June 4>
Reporter Jeong Yu-mi:
Having watched for a year, is the Lee Jae-myung administration doing well?
Former Chairman Kim Chong-in:
If I were to evaluate the one year, it hasn't done much wrong, nor has it done anything particularly outstanding.
Reporter Jeong Yu-mi:
If you were to give a score, how would you grade it?
Former Chairman Kim Chong-in:
One can only think of it as acceptable.
Former Chairman Kim Chong-in, who had clearly refrained from criticizing or pointing fingers at the administration while saying it was doing acceptably, seemed thoroughly upset when I met him about two months later. Below is a summary of the live broadcast interview conducted with former Chairman Kim on August 12 regarding the president and the Democratic Party national convention to see what made him turn around.
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Q. On the day after the local elections ended, I asked for your evaluation of the Lee Jae-myung administration. How do you see it these days?
Former Chairman Kim Chong-in:
I did say that he spent a reasonable first year after taking office, but the issues President Lee Jae-myung brought up during what was called a town hall dialogue with the public seem to have backfired on the general public instead. That's why I think his approval rating has been declining and negative public opinion has increased, as shown in recent polls.
Q. You are talking about the public debate on real estate presided over by the president, right?
Former Chairman Kim Chong-in:
In my view, the very idea that real estate issues can be solved through a debate is fundamentally flawed. In fact, if you review the real estate issue continuously starting from past administrations, an answer can easily be found there.
The real estate issue that has recently become problematic is the housing issue centered on Seoul, which is currently a hot topic. But as long as one thinks simply that such problems exist because speculation is taking place, I think it becomes even harder to solve the problem.
The current housing problem in Seoul is due to the concentration of population in the metropolitan area and the increased demand for housing as living standards improved with economic development. Prices rose because supply could not meet demand, but if you think prices went up as if speculative activities were rampant, you cannot solve the problem.
Reporter Jeong Yu-mi:
Are you saying the diagnosis itself was wrong from the start?
Former Chairman Kim Chong-in:
That's how I see it.
Q. President's approval rating is on a downward trend, and negative public opinion on real estate is cited as the cause.
Former Chairman Kim Chong-in:
Well, that's obvious. Why did the Democratic Party lose the Seoul mayoral election, which is most affected by the central government? I once said that the factor lies in President Lee Jae-myung's real estate tax system.
Reporter Jeong Yu-mi:
Yes, back then you were concerned about President Lee Jae-myung continuously sending messages regarding real estate taxation.
Former Chairman Kim Chong-in:
I said it would be better if he refrained from doing that if possible, but they kept talking as if they were confident. I believe that ultimately played a decisive role in Mayor Oh Se-hoon getting elected.
Q. So you view real estate as having been decisive in the Democratic Party's defeat in the Seoul mayoral election during the last local elections.
Former Chairman Kim Chong-in:
Then after the election, there should have been a thorough review of the election results. Why did they lose in Seoul while doing fine elsewhere? Even within Seoul, areas related to real estate taxes gave many votes to then-candidate Oh Se-hoon, leading to his election. That's the point. Even after confirming that, they keep talking only about that issue.
But what's most problematic is that President Lee Jae-myung should know how to distinguish between what he can do and what he cannot do, but he doesn't seem able to make that distinction. He thinks that if the president speaks with interest, the problem will be solved, but he needs to realize that far from solving the problem, he is only losing the general public's trust in him step by step—yet he doesn't seem to realize that.
Q. You mean that the president mentioning the real estate issue itself undermines trust?
Former Chairman Kim Chong-in:
Exactly. President Lee Jae-myung's tendency is to keep speaking about all economic variables assuming things will be resolved right away if he speaks, but that actually produces reverse effects.
For example, he keeps talking about taxes regarding real estate, but as far as I can see, President Lee Jae-myung is not a tax expert. I don't know who is advising President Lee on taxes, but if he keeps making official statements based on that kind of advice, he cannot help but drift further away from the public. Talking about holding taxes, demanding heavy taxation on high-priced properties, or levying comprehensive real estate tax even on joint spousal ownership—I consider these statements below common sense.
In my view, I think I knew well enough whether the Tax Bureau of our Ministry of Finance and Economy was operating in accordance with the basic principles of taxation. I don't believe the Ministry's Tax Bureau submitted a proposal like the current one on its own initiative; rather, as the president said something else during the reporting process, the Tax Bureau ended up following along, which I think led to resistance from the public.
Q. So the Tax Bureau ultimately moved in the direction desired by the president?
Former Chairman Kim Chong-in:
I don't think the president is someone who holds firm convictions on taxation. It seems he keeps speaking after hearing things from someone now, but frankly speaking, if a president talks endlessly about economic variables, it only yields side effects and you cannot expect positive results from it.
Q. However, they are not sticking rigidly to the tax reform proposal as is; the president also said that if there are problems, they will supplement it.
Former Chairman Kim Chong-in:
Who started it in the first place, and now they make excuses over the results? In my view, if the president hadn't said anything, I don't think the Tax Bureau would have produced such a tax reform proposal.
Q. Then what should be done now? After all, the reform plan has been announced.
Former Chairman Kim Chong-in:
Frankly speaking, what I want to advise President Lee Jae-myung is that I hope he properly understands the relationship between tax policy and politics.
What President Lee Jae-myung should consider most important right now is how to win the 2028 general elections for his side; that is the most crucial task. But if they tamper with tax policy incorrectly now and confirm the tax reform in the regular National Assembly session at the end of this year, the imposition of those taxes begins next year. Then once people pay those taxes, he must clearly recognize what impact that will have on the next general election before doing anything. Didn't we thoroughly experience under the previous Yoon Suk Yeol administration that regretting after failing in the general elections is useless? Looking at what President Lee Jae-myung has done so far regarding real estate and taxes, there is no way to guarantee that a repetition won't happen.
Q. But the president's argument was this: "When tax policy changes, those who originally benefit stay quiet, while those whose burden increases inevitably harbor immense resentment."
Former Chairman Kim Chong-in:
That is not something a president should say. Taxation may at first glance seem to affect only a specific class, but the effects it brings are not that simple.
And looking at it, after talking about tax policy regarding real estate, recently he suddenly brings up the issue of tax equity. So he compares income tax with capital gains tax and says it's equitable, but does capital gains tax stop real estate transactions? Absolutely not.
One must approach tax issues keeping in mind that imposing taxes generates a backlash against the tax itself; mistaking that imposing taxes is the end of it is a grave error.
Q. You spoke about the importance of the general elections. But what if his stance is that he won't care about such things to that extent and will do what must be done?
Former Chairman Kim Chong-in:
That is not something a politician should say. Once a politician loses politically, no amount of regret afterward will do any good.
For instance, a case where taxes influenced politics in our country was the 10th general election in 1978. At that time, despite the ruling party being so powerful, it lost nationwide to the Democratic Party by 1.2 percentage points. The defeat of the ruling Democratic Republican Party in that 10th general election even led up to the death of President Park Chung-hee. The most important factor in that defeat was forcing through the value-added tax when the public knew nothing about it. One must know that the backlash against it played a major role.
Q. Real estate is a problem that is truly difficult to handle not just for this administration, but for every administration, isn't it?
Former Chairman Kim Chong-in:
Fundamentally, after concentrating the population in the metropolitan area naturally, there are many people who want to live in Seoul, but because the housing supplied in Seoul falls short of demand, prices naturally rise. This is a situation arising fundamentally from market principles, so forcing something onto it—what can that accomplish?
Recently, seeing that they want to increase supply by building homes wherever there is any vacant land, shouldn't a city have a certain amount of open space for it to function as a city? Can a city function if you just build houses on every piece of land?
Q. You mean just building housing on idle land is not the answer.
Former Chairman Kim Chong-in:
Even so, whether supply will become sufficient afterward is doubtful. In reality, solving that problem politically is extremely difficult. So while they say they are doing it to break through the current situation, I hope they speak after thinking deeply about what long-term impact it will produce as a result.
Q. When I asked for an evaluation of the Lee Jae-myung administration, it led all the way to real estate. So you view real estate as the most unsatisfactory area—that is, as having problems?
Former Chairman Kim Chong-in:
It's not just real estate. President Lee Jae-myung is very interested in the stock market, isn't he? Because the president is so interested in the stock market, the policy chief assisting the president introduced single-stock leveraged ETFs, and when that became an issue, they ended up having to make excuses for it—isn't that how it goes?
As I always say, the stock market is an organized market, so it is a place where market principles operate most efficiently. If the government keeps commenting on this and that, it only brings confusion to the stock market, making normal market development impossible in the end. Isn't that why over the past few months stock prices went near 10,000 and have now come down to 6,000-something? Because the drop was so severe, the stock market moved into an unstable state instead.
Q. To summarize, you are saying the president needs to refrain as much as possible from commenting on economic issues like real estate and the stock market.
Former Chairman Kim Chong-in:
I believe it is wise for the president to absolutely avoid commenting back and forth on economic variables.
Q. There is a possibility that a Seoul mayoral by-election will be held next year. Listening to you, it makes me think that even if a by-election is held, it might be difficult for the ruling party.
Former Chairman Kim Chong-in:
Because it depends on how the trial outcome turns out, I cannot say definitively, but assuming a Seoul mayoral election is held next year under conditions like today's, I think it would be extremely difficult for the ruling party to win.
Q. With the revision of the Criminal Procedure Act, the prosecution's investigative powers have been completely abolished, haven't they? This conclusion was reached even though public opinion favoring against abolition was higher. I'm curious how you view this situation.
Former Chairman Kim Chong-in:
Isn't it common sense among the general public that 'the complete abolition of supplementary investigative authority should not happen'? The president promulgated it through a Cabinet resolution, and then the president makes statements saying if there are flaws, it must be amended. That's why I think it would have been proper for President Lee Jae-myung to examine such issues more closely in advance to prevent problems before handling them. That's identical to the tax issue right now.
Reporter Jeong Yu-mi:
You mean that the attitude of 'we'll do it first and revise it later' doesn't inspire much trust, right?
Former Chairman Kim Chong-in:
That's right. Then the public can only distrust it repeatedly. Did the president speak knowing the subject properly, or did he just take advice unilaterally from someone and say it? So in fact, I think it is wise for the president to reduce his remarks as much as possible.
Q. I understand you mean it would be better for the president to reduce not only social media messages but public remarks themselves.
Former Chairman Kim Chong-in:
President Lee Jae-myung's active drive and motivation to do everything diligently are good, but politics is not solved by willpower and power alone. If he falls into the illusion that everything can be solved if the president speaks with interest, I think it will be hard to succeed.
Therefore, unless the president speaks as cautiously as possible, I think the side effects are too severe. Frankly, having served presidents myself, what I always told presidents was: "Please do not speak about things you yourself do not know properly with conviction."
Q. Even about two months ago, you seemed to be trying to view the Lee Jae-myung administration favorably.
Former Chairman Kim Chong-in:
Frankly speaking, I was someone who hoped the Lee Jae-myung administration would succeed for the future of the nation when it launched. I thought it would do relatively well, but seeing the announcement on June 29 this year of the 4,755 trillion won (three major) mega project, I felt, "Ah, he too is misjudging something."
Moreover, looking recently at how things are being done with real estate tax issues, because he keeps talking as if he knows best what he himself doesn't know well, when the president speaks, the administrative bureaucrats underneath are forced to follow. Thus, it has become extremely difficult to judge whether the Tax Bureau of the Ministry of Finance and Economy—which has managed the tax system for decades—is presenting a tax policy like the current one because they genuinely judge it to be right or not.
Q. You mean because the president's message is so strong, they have no choice but to act accordingly?
Former Chairman Kim Chong-in:
That's right. When the president speaks, shouldn't administrative bureaucrats naturally follow along?
Q. Let me move on to the Democratic Party national convention. Candidate Kim Min-seok is currently ahead by 1.48 percentage points. Since Honam and the Seoul metropolitan area account for such a large weight this weekend, it seems difficult to be certain who will win.
Former Chairman Kim Chong-in:
Even so, in my view, predicting it won't be that difficult. Frankly speaking, if Candidate Jung Chung-rae becomes leader instead of Candidate Kim Min-seok, what would that signify? Doesn't it mean that even party members do not support the president? The president put Candidate Kim Min-seok forward hoping he would win, and if that doesn't happen, doesn't it end up looking like the party distrusts President Lee Jae-myung? I believe such a phenomenon won't happen.
Party members think that the Lee Jae-myung administration must do its job properly and succeed for them to win the next general elections and retain power. If someone out of sync with President Lee Jae-myung becomes party leader and creates various obstacles to the president carrying out his duties, they think achieving those goals will be difficult. I think party members will make a judgment to that extent. On that premise, in my view, Candidate Kim Min-seok will likely become party leader, even if by a narrow margin.
Think back to the last Supreme Council election. When President Lee Jae-myung ran for party leader back then and Kim Min-seok and others ran for the Supreme Council, Kim Min-seok was trailing Candidate Jung Bong-joo considerably early on, but in the end Jung Bong-joo fell out of the Supreme Council and Kim Min-seok became chief Supreme Council member. Frankly, that is the inclination of general party members. If the president prefers Kim Min-seok, so far party members have had no choice but to follow President Lee Jae-myung and move accordingly.
Q. If Candidate Kim Min-seok becomes leader, he will become a strong presidential contender, but this time Candidate Jung Chung-rae's vote share is high considering the president openly backed Kim Min-seok. Should Candidate Jung Chung-rae also be considered a strong presidential contender for the Democratic Party in the next election?
Former Chairman Kim Chong-in:
If Candidate Jung Chung-rae loses this party leadership election, in my view, I think that hope will be gone.
Reporter Jeong Yu-mi:
Still, doesn't he have his own power shown during the election process?
Former Chairman Kim Chong-in:
That power is present power; whether that power is maintained after the election results are finalized is a separate issue.
Q. During the national convention process, divisions and conflicts within the Democratic Party were revealed very clearly. That's why voices expressing deep concern about the situation of the Democratic Party afterward, regardless of who becomes party leader, are high.
Former Chairman Kim Chong-in:
In my view, I don't think Jung Chung-rae will leave the party just because he doesn't become leader. When he was cut off during nominations for the 20th general election in 2016, he didn't leave the party either and campaigned hard in his own way. I saw that his loyalty to the party was tremendous, and I don't think someone who even served as party leader will storm out of the party just because he failed to be re-elected as leader this time.
Q. How will the Supreme Council be composed?
Former Chairman Kim Chong-in:
Looking at the current voting results, doesn't it become three so-called pro-Myung members and two pro-Cheong members?
Reporter Jeong Yu-mi:
For example, I'm curious what the atmosphere in the Supreme Council would be like if Party Leader Kim Min-seok and Supreme Council Member Choi Min-hee meet.
Former Chairman Kim Chong-in:
Once power tilts to one side, they have to follow along. No matter how much one or two Supreme Council members struggle, they cannot exert much influence.
Q. Becoming the ruling party leader in the second year of governance—what role is needed if elected this time?
Former Chairman Kim Chong-in:
For instance, if Candidate Kim Min-seok becomes party leader and a tax reform like the current one comes up that is completely out of touch with public sentiment, he will have no choice but to voice opposing opinions and demonstrate party efforts to correct it. If such corrective efforts are not made, it will be difficult to bring victory in the next general election.
While the party cooperates with the government, there are areas where the party should not interfere, and in legislative matters directly tied to public sentiment, I think the party needs to strongly express its opinions. Currently, political parties seem to lack much of that capability. Then they inevitably go against public sentiment in the end.
Q. There are many analyses that the reason they fought so fiercely during this national convention is that nomination rights for the general election in two years are at stake. So if Candidate Kim Min-seok wins this time, the pro-Cheong faction is all out in the next general election, and conversely if Candidate Jung Chung-rae wins, the pro-Myung faction is out...
Former Chairman Kim Chong-in:
Completely eliminating the pro-Cheong faction like that won't even be possible. Because nominations must be made focusing on winning, right? Except perhaps in strongholds where the Democratic Party can win by just putting up a wooden stick, in other places they have no choice but to focus on electability, so a result where everyone is excluded cannot happen.
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