A debate on a cash handout is pointless

President William Lai’s (賴清德) administration plans to distribute NT$10,000 in cash to every citizen next year, while the Chinese Nationalist Party (KMT) caucus on Tuesday said it plans to propose a bill that would provide a NT$20,000 cash handout. Whether to hand out NT$10,000 or NT$20,000 has become the latest point of contention between the ruling and opposition parties, but beyond the political tug-of-war, a much more important question remains: Once the money is spent, what would Taiwan have to show for it?

Universal cash handouts are simple, direct measures that are immediately felt by the public. With prices, rent and the cost of living all rising, a cash payment might provide meaningful assistance to many households. Therefore, universal cash handouts should not be reduced to a binary choice between “handing out money is pandering to voters” and “not giving any money is neglecting people’s livelihoods.”

The problem is that while cash can ease immediate financial pressure, it does little to address structural issues such as wages failing to keep pace with the cost of living, housing affordability for young people, a declining birthrate, long-term care needs and the transformation of small and medium-sized enterprises. The amount of any universal cash handouts offers an additive effect — meaningful institutional reform is what holds the potential for a multiplicative impact.

Rather than repeatedly engaging in a political struggle over how much cash to distribute whenever fiscal conditions allow it, the government should establish a transparent and predictable sharing mechanism for economic dividends that allocates fiscal surpluses into three pots: one for debt reduction to ease the burden on future generations, one for investment in areas such as childcare, housing, long-term care and industrial transformation and one to be shared among the public, depending on fiscal capacity. Universal cash distribution would no longer be one-off handouts, but part of a fiscal system. When the economy is doing well and the government has the capacity, people can share in the gains while the government simultaneously reduces the debt burden on future generations and accumulates long-term investment.

Moreover, the fruits of economic growth do not necessarily find their way into everyone’s pockets. The robust performance of the artificial intelligence (AI), semiconductors and export-oriented industries does not mean that people working in the restaurant, retail, tourism and traditional industries — or all wage-earning households — are experiencing the same benefits. True, tangible economic growth is not a mere matter of GDP, but whether wages can keep pace with the cost of living, whether young people can afford housing and raise children and whether elderly people can enjoy a secure retirement.

What the ruling and opposition camps should really be competing over is not simply who can hand out more money, but who can ensure that the benefits of economic growth last longer. Whether the amount is NT$10,000 or NT$20,000, any such policy should be guided by three basic principles: It should not increase the government’s debt burden, it should not crowd out existing government programs and it should follow lawful and constitutional budgetary procedures.

Once the cash is spent, it is gone. It is the institutions that remain and can continue to deliver benefits year after year. Rather than fighting over whether next year’s handouts should be NT$10,000 or NT$20,000, the government and the opposition should seize the current wave of economic growth to turn today’s “AI dividend” into tomorrow’s “institutional dividend.”

Chen Ching-yun is a former director of the Legislative Yuan’s Bureau of Legal Affairs.