Cash handout? Stupid, wasteful idea, Japanese say

Cash handout? Stupid, wasteful idea, Japanese say. (But they'll take the money anyway.)

• Tomoko A. Hosaka, Associated Press Writer
• Tuesday March 3, 2009, 11:40 pm EST

TOKYO (AP) -- Cash back from the government?

Stupid, wasteful and ineffective -- and a shameless attempt to woo voters, many Japanese say.

Prime Minister Taro Aso is touting a one-time cash handout of 12,000 yen, or about $120 per person, as the centerpiece of a stimulus package to revive the world's second-largest economy, mired in one of its worst slumps since World War II.

But polls show that most Japanese oppose the idea -- though many confess they'll take the money anyway.

They argue that most people will just save the money, not spend it. Others say it's a shortsighted plan that exacerbates the government's ballooning budget deficit. Some call it a ploy to boost the plunging popularity of Aso and the ruling Liberal Democratic Party.

"Japanese politicians are so immature in the way they think the economy should be run," said Atsuko Yamaguchi, 42, of Osaka. "It's always for-the-moment kind of thinking. It's so stupid. I'm so ashamed."

Yamaguchi says she'll accept the cash because she just lost her job at a consulting firm.

"But will it really be helpful for the economy of Japan?" she asks. "I don't think so."

A national telephone poll last month by the Yomiuri, the nation's biggest daily newspaper, found that three-quarters of the 1,087 respondents disapproved of the cash payouts. In a similar survey by the Asahi newspaper, nearly two-thirds wanted the government to scrap the plan.

The widespread repulsion seems driven largely by disgust with Aso and a perceived lack of leadership at a time of crisis, experts say. Aso ranks among the country's least popular leaders since World War II with approval ratings edging toward single digits. Elections must be held by September.

"The (ruling party) just thought ... wave the money in front of their noses, and they'll come running," said Jeff Kingston, a contemporary Japanese history professor at Temple University in Tokyo. "I think they underestimated the depth of anger from the people about the government's inability to provide credible leadership and a credible recovery plan."

Japan can hardly afford another misstep. Jobs are disappearing and companies are seeing deep red as the global financial crisis takes a particularly heavy toll on this export-driven nation. Last quarter, the economy shrank at its fastest pace in 35 years.

Under the 2 trillion yen ($20.4 billion) plan, every resident would receive 12,000 yen. Children under 18 and seniors over 65 would get 20,000 yen, or about $200.

The plan was approved by lawmakers in late January but has been stuck in political limbo since then, with the opposition-controlled upper house holding up related legislation needed to fund the payouts.

As expected, the upper chamber rejected the bill Wednesday morning. The more powerful lower house, controlled by the LDP, can push the bill through with a two-third majority when it convenes for a re-vote later in the day.

A spokesman for the prime minister acknowledged the public criticism of the handout but reiterated that while many people may not agree with it, that won't stop them from pocketing the cash.

"We believe that a significant portion of the population will be appreciative once they receive the money," said Osamu Sakashita, Aso's deputy cabinet secretary for public relations.

He added that the chief aim of the measure is to help households meet immediate economic needs. The government expects some macroeconomic impact, though there are no official projections, Sakashita said.

After dancing around the issue for weeks, Aso told reporters Monday that he and his Cabinet will take their share of the payout.

"I will use it immediately to help stimulate consumption," he said.

Kotaro Otsuka, a 33-year-old sales engineer in Tokyo, sheepishly admits that he'll accept the handout even though the idea -- and its high administrative costs -- make him cringe. Cities will be responsible for handing out the money, with the central government footing the 82.5 billion yen ($850 million) in distribution fees.

"The LDP's strategy of using pork-barrel spending to somehow get through the next election is something I really can't forgive," Otsuka said. "They are playing us for fools."

Experts are doubtful about the economic impact as well.

At best, the cash handout will lift consumption temporarily in the second quarter and boost gross domestic product by a small fraction of a percent, said Masamichi Adachi, senior economist at JP Morgan Securities in Tokyo.

He estimates that a quarter of the cash will go toward new spending. The rest will go straight into savings accounts.

In contrast, a survey conducted last summer by the Washington-based National Retail Foundation showed that American consumers had spent or planned to spend 46 percent of $105.7 billion in rebate checks distributed last year.

Elsewhere in Asia, Taiwan has given out about $100 per person in spending vouchers.

Some Japanese do want the money -- now.

Mitsugu Okada, a small-town mayor in western Japan, submitted a petition to the national government on behalf of his 509 villagers -- nearly half of whom are over 65 -- asking officials to disburse the cash as quickly as possible.

"We have no industry, and we're old," said Okada, leader of Kitayama village in Wakayama prefecture. "So they are certainly looking forward to the money. It's a decision that's been made, so at this point, they just want to see their cash."