EDITORIAL: 2 trillion yen for growth

We would welcome the ruling party's budget proposal if it really leads to radical budget reform and a spending plan that clearly reflects policy priorities. But we have reason to feel uncertain about whether that will happen.

The budget proposal by the Democratic Party of Japan's policy research council, made before ministries and agencies submit their budget requests for next fiscal year, calls on the government to set aside 2 trillion yen ($23 billion) for high-priority expenditures while preventing any significant increase in overall spending other than debt-service payments. Implementing the proposal would require cuts in other outlays.

Finance Minister Yoshihiko Noda is expected to urge ministries and agencies to reduce their budget requests by about 10 percent from the figures for the current fiscal year.

The DPJ-led government has promised integrated and centralized policymaking within the government. This new approach to policymaking is intended as a remedy to backroom political maneuvering by special-interest politicians to influence budget decisions.

That, however, doesn't mean the ruling party should not take part in budget debate.

The government is facing a divided Diet with the Upper House under opposition control. The ruling party doesn't have the two-thirds majority in the Lower House needed to override the Upper House rejection of a bill.

In this situation, the government cannot push through its policy initiatives without strong support and effective cooperation from the ruling party. The party's policy council should not be criticized for making budget proposals to the government.

What the party should bear in mind is that if it influences policy decisions it shares the political responsibility for them.

Policy debate is needed to decide which programs should be given priority in budgeting and which should be slashed.

The government should reject irresponsible spending requests from the party.

The ruling party should not forget that its election promises not supported by viable financing plans have caused serious policymaking confusion.

In announcing its budget proposal, the DPJ should have offered a clear plan to finance the 2-trillion-yen earmark.

The party said the scheme would be financed by the elimination of wasteful spending and the overall reallocation of funds. But it didn't make clear which expenditures would be trimmed and by how much.

The government adopts the so-called "pay-as-you-go" principle, which requires securing a commensurate permanent revenue source for any new policy initiative that increases government spending.

Pressure for spending increases is growing in the DPJ following the party's defeat in the July 11 Upper House election.

Party members calling for more spending are blaming the defeat on Prime Minister Naoto Kan's remarks suggesting his willingness to raise the consumption tax. They are pressuring the government to change its fiscal stance.

In a recent Asahi Shimbun survey, only 32 percent of the respondents said they had put much importance on Kan's remarks and actions concerning the consumption tax in making their voting decisions in the Upper House poll. That compares with 57 percent who said they had not. The survey also showed 63 percent called for a debate for a consumption tax hike.

The point was not public aversion to a consumption tax hike. It was the sentiment among voters that the government cannot be trusted with their money.

Kan initially enjoyed strong public support because he showed a commitment to end old politics, such as the role of special-interest money and patronage, through his choices for the Cabinet and party executive posts.

Kan must not misread the voter message. The election loss has made it all the more important for him to step up his efforts to lead the nation away from old politics.

If he gives in to political pressure for irresponsible spending increases after indicating a consumption tax raise, he would effectively contradict himself.

If he is worried about the upcoming party leadership election, Kan should do his best to focus on regaining the trust of voters instead of compromising his own principles to please his critics within the party.

Kan should speak more to the public about his policies.

--The Asahi Shimbun, July 24