Can Tsai Ing-wen Avoid the Second Term Curse?

Written by Kharis Templeman.

Image credit: 總統蔡英文與前總統馬英九步出總統府 by 總統府/Flickr, license CC BY 2.0

If Tsai Ing-wen is superstitious, she should be worried: second term presidents in Taiwan appear to be cursed. Much like President Tsai, her predecessor Ma Ying-jeou started his second term on a confident and triumphant note. But over the next four years, he faced a relentless series of political crises, including an intraparty power struggle with Legislative Yuan Speaker Wang Jin-pyng, massive protests against the death of a military conscript and construction of a nuclear power plant, and of course the Sunflower Movement occupation of the legislature, which effectively halted cross-Strait rapprochement with Beijing. President Ma’s approval ratings bottomed out at record lows, and he stepped down in 2016 on the heels of a sweeping electoral defeat of the ruling Kuomintang (KMT), ultimately having accomplished little in his last years in office.

Somehow, Chen Shui-bian’s second term was even worse. The controversy around his re-election victory in 2004 robbed him of whatever political momentum he might have enjoyed, and he spent most of his remaining tenure fending off vicious partisan attacks, anti-corruption accusations in the press, massive street rallies by his opponents, and impeachment attempts in the legislature. In his attempt to keep core pro-independence supporters on his side, President Chen pursued a brash symbolic agenda that deliberately provoked the pan-Blue opposition, infuriated Beijing, alienated even potential allies in Washington, and left him politically isolated. In the 2008 elections, his Democratic Progressive Party (DPP) paid a steep electoral price, and after his term was finally over, Chen ended up in handcuffs: the corruption accusations turned out to be true, and he was sentenced to a long prison term.

The Pitfalls of a Second Term

Chen and Ma both bear plenty of individual blame for the way their respective presidencies ended. But this “second term curse” is not unique to them, or to Taiwan. In presidential regimes with a two-term limit, like the US, France, Indonesia, and Argentina, the second term is often more challenging than the first. Being term-limited is a double-edged sword. On the one hand, the president can promote her agenda without worrying any longer about the next election. But on the other, there is the danger of turning into a lame duck: ignored or abandoned by erstwhile allies, criticized by opponents, and loved or feared by no one.

At the moment, President Tsai looks well-positioned to avoid the political fate of her predecessors. Despite ongoing trouble in the cross-Strait relationship, her domestic approval ratings have soared after her record victory in January and the government’s excellent response to the COVID-19 pandemic. She has resumed the chairmanship of the DPP, from where she can directly ride herd on the party’s legislative majority to back her agenda. And as an added political bonus, her main opponent in the presidential election, Han Kuo-yu, has been successfully recalled as mayor of Kaohsiung, adding an exclamation point to her political rejuvenation and leaving the opposition KMT further divided and demoralized.

Yet there are some dangerous pitfalls on the road ahead. Much like Ma Ying-jeou, Tsai has started her second term with support that is broad but shallow, and it is easy to imagine scenarios where much of the diverse coalition that backed her reelection does not follow where she wants to lead. Winning approval for reform bills in the Legislative Yuan may be particularly challenging: for both Ma and Chen the legislature was where presidential initiatives went to die. The DPP controls only a narrow and somewhat fractious majority, and it faces not only an experienced KMT caucus but also the New Power Party (NPP) and Taiwan People’s Party (TPP), both with electoral incentives and institutional tools to criticize and obstruct the administration’s initiatives. Tsai is also more centrist than most of her own party on cross-Strait relations, and she is likely to take increasing fire from deep-green elements of the DPP for stalling on cherished nationalist goals such as introducing a new constitution, changing the name of the country, and eliminating the other remaining vestiges of Taiwan’s symbolic connections to mainland China.

Tsai’s Daunting To-Do List

President Tsai also has a daunting domestic to-do list. At the top is the economy. Taiwan has come through the pandemic better than almost every other country in the world, thanks to a quick response, competent leadership and public health expertise, and effective quarantine enforcements. But the domestic economy is still facing a prolonged slowdown due to the collapse of international travel and tourism and the broader pandemic-driven downturn around the world. Steering the country through what is likely to be a slow recovery will require considerable political skill, and it will probably take a toll on President Tsai’s popularity.

A sluggish economy will also limit the political room for unpopular but badly needed reforms that raise new government revenue. At 12-14% of GDP, Taiwan’s government tax take is among the lowest in the developed world, below every country in the OECD. (Mandatory health insurance premiums and pension payments total up to roughly another five percent but leave Taiwan still significantly below peer states such as South Korea and Japan.) It is also unbalanced: salaries, wages, and consumption are taxed much more heavily than business income, capital gains, or inheritances. As Taiwan’s income and wealth gaps have continued to increase in recent years, this tax structure has only added to the sense of unfairness and frustration felt by many Taiwanese, especially young people earning low salaries who cannot afford to buy homes. In her first term, President Tsai and the DPP tinkered around the edges of the tax system but did not dare to attempt fundamental reform, once again kicking this problem down the road.

The unbalanced tax system is also a long-term problem for another reason: Taiwan is facing rising costs of social welfare programs because its demographic age structure is dire. Today there are twice as many 40-year-olds as 10-year-olds, and the total population could even decline this year for the first time in Taiwan’s postwar history. With one of the lowest fertility rates in the world, it is rapidly becoming a “super-aged” society, close on the heels of Japan. Those facts mean that Taiwan’s workforce will continue to shrink over the next decade at the same time that the share of retirees skyrockets, putting increasing financial strain on its national health insurance and pension systems. In Tsai’s first term, the DPP-led legislature eventually approved reforms to the civil servants and military pensions to put them on a more sustainable path, but the changes did not eliminate the need for additional revenue in the coming years to meet the government’s obligations to its retirees. Tsai also expanded a government-funded long-term care program that increased the burden on the central budget.

President Tsai will also have to balance competing political pressures on immigration, which would be the most obvious way to mitigate the coming demographic crunch. Taiwan’s roughly 800,000 foreign-born residents (excluding PRC nationals), most of them migrant workers or foreign spouses, together already make up 3-4% of the total population. But as in many countries, promoting additional immigration is a politically fraught policy which risks inflaming political, cultural, and economic insecurities. The recent deterioration of political conditions in Hong Kong has stimulated interest there in Taiwan as a possible refuge, opening up another possible source of immigrants—many of them wealthy, high-skilled Chinese speakers—but also one that would touch directly on the ever-sensitive national identity issue. A refugee or asylum law to address this prospect remains only at the proposal stage, with the Tsai administration insisting that it will manage any influx of political refugees under the existing terms of the Hong Kong and Macau Relations Act. Ultimately, how Tsai handles this issue could reverberate in domestic politics for decades to come, and it is likely to anger part of her base no matter how her government ultimately responds.

Another urgent concern is defense reform. Here, Tsai made some meaningful progress in her first term: after a slow start, her administration has followed through on a campaign promise to increase the annual defense budget, and it has used special appropriations to pay for six arms sales packages from the United States, including a major purchase of 66 F-16Vs at an approximate cost of US$8 billion. But budget increases and arms purchases are low-hanging fruit: Taiwan badly needs a more fundamental revamp of its force structure, doctrine, and training to better reflect the asymmetric defense mission it now faces. Moreover, Taiwan’s military is nearing the end of a transition to an all-volunteer force that has been repeatedly delayed by recruiting shortfalls, and a plan to introduce unit-level reserves to supplement the regular armed forces has not moved forward. The plodding pace of adjustments in the military risks leaving it ill-suited for deterring a cross-Strait conflict—but the way forward is neither simple nor easy, and will require overcoming entrenched resistance to reforms among both the military brass and the Taiwanese public.

As if that were not enough, the Tsai administration will also have to resolve difficult political trade-offs in energy and trade policy—two areas that repeatedly tripped up Ma Ying-jeou. Tsai remains committed to the phase-out of nuclear power by 2025, despite the passage of a counter-referendum in 2018 and the likely increases in greenhouse gas emissions and air pollution this policy will entail. Her government is also eager to step up trade talks with the United States and Japan, but progress in these negotiations will probably require making concessions that are politically unpopular: allowing more pork imports from the United States, and agricultural products from Fukushima prefecture in Japan.

On top of all this, Tsai has laid out several important political reforms to tackle as well, including lowering the voting age to 18, changing judicial appointments and the criminal trial system, and creating new agencies to monitor digital media and counter PRC influence campaigns. All will require action by the legislature—and none are likely to pass without first forging a cross-party consensus. It is easy to imagine this ambitious agenda going awry as well.

Are Hard Reforms Possible?

On a more positive note, President Tsai was reelected with a strong mandate: 57 percent of the vote on high turnout. She is chair of the DPP again, and the ruling party has retained its majority in the legislature. Perhaps most important, her governing style is very different from Chen’s and Ma’s: her preferred approach has been to build support gradually within her party, if not within society as a whole, for particular policies. But Tsai will face a lot more hard choices in her second term than in her first. In order to set Taiwan on a better long-term trajectory, she cannot just follow public opinion or wait for a consensus to emerge within the DPP.

After the epic dysfunction of the Chen and Ma years, it remains an open question whether the Taiwanese political system remains flexible and pragmatic enough to implement hard but necessary reforms. I will be rooting for President Tsai to demonstrate that it can.

Kharis Templeman is an adviser to the Project on Taiwan in the Indo-Pacific, Hoover Institution, Stanford University. He is the editor (with Chu Yun-han and Larry Diamond) of Dynamics of Democracy in Taiwan: The Ma Ying-jeou Years, forthcoming from Lynne Rienner Publishing. He tweets @kharisborloff

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