EDITORIAL: LDP remains unchanged in its return to power
We cannot help thinking that the Liberal Democratic Party has not changed.
The administration of Prime Minister Shinzo Abe has decided the outline of a supplementary budget for fiscal 2012, which ends in March 2013.
The total government expenditure in the budget is slightly more than 13 trillion yen ($146 billion), which is close to the record high of 14.7 trillion yen set by the supplementary budget compiled in spring 2009 by the administration of then-Prime Minister Taro Aso.
Excluding planned government expenditures for the basic pension programs from the 13 trillion yen, the remaining 10 trillion yen will be used for "emergency economic measures." Of that amount, half will be spent on public works projects. The funds for those public works will be covered with the issuance of government bonds. As a result, the total amount of government bonds issued in fiscal 2012, including that of the initial budget for that year, is expected to come close to 50 trillion yen.
At present, the government’s total debts stand at around 1,000 trillion yen. In such a situation, the Abe administration is emphasizing that its fiscal policies will first realize economic growth to increase tax revenues. “We will deal with the (serious fiscal) situation flexibly in the short term and with discipline in the mid- to long term,” he says.
We are not going to deny such thinking completely. However, we get the impression that the Liberal Democratic Party is going on a spending spree out of elation that it was able to take back the reins of the government.
Under names such as “reconstruction and disaster prevention” and “establishment of safe living conditions and revitalization of local communities,” the amount of public works projects in the supplementary budget was increased to a level comparable to that of an annual budget. Since there is no way the entire amount can be spent within fiscal 2012, the budget is virtually reserved for fiscal 2013 and beyond.
In the area of defense, the cost for purchasing missiles from abroad is positioned as part of the economic measures on grounds that Japanese companies are involved in their production process.
Those “unreasonable” expenditures were approved because the LDP had first decided that the amount for the economic measures should be as large as 10 trillion yen.
The decision reminds us of the supplementary budgets compiled in the autumn of 2011 in response to the Great East Japan Earthquake and in the spring of 2009 to stimulate the economy.
The LDP and New Komeito, both of which were opposition parties at the time, had much to do with the compilation of the post-quake supplementary budget. But far-fetched “piggyback” expenditures not directly related to the recovery of stricken areas became prevalent.
The supplementary budget of spring 2009, decided under the Aso administration in response to a sudden economic slowdown caused by the collapse of U.S. investment bank Lehman Brothers in September 2008, also put priority on the total budget amount. In fact, it was so lavish that it eventually led the Board of Audit to point out various wasteful expenditures.
In the Dec. 16 Lower House election, the LDP advocated “the strengthening of the national land” as a mainstay of its election pledges. Now, the LDP headquarters is busy dealing with officials of industry associations who are flocking there with petitions. Is this large-scale supplementary budget a gift of gratitude to them for supporting the LDP in the Lower House election and also a means to obtain their support in the Upper House election slated for summer 2013?
The big supplementary budget was also compiled to boost the economy in the first half of fiscal 2013 as economic growth in that period is believed to be necessary to make the final decision in the autumn of this year on the consumption tax hike scheduled for spring 2014.
If even the Finance Ministry--which is supposed to play a leading role in reducing the government's debts--is falling into step with plans to increase spending in order to be able to raise the consumption tax, the situation is truly deplorable.
In the beginning of this year, an income tax increase started for the advancement of post-quake reconstruction activities. Going forward, consumers will be required to shoulder heavier financial burdens one after another, including a consumption tax hike.
In such a situation, taxpayers are sure to raise objections if the government keeps compiling such generous budgets.