An intense debate is raging among three of the nation's top fiscal panels on how to reform state revenues and expenditures in an integrated manner. The bodies are the Council on Economic and Fiscal Policy, the Liberal Democratic Party's fiscal reform panel, and the fiscal system council of the Finance Ministry.

One of the major issues in the debate is how to assess Japan's economic growth rate in the future. The government has already set a goal of achieving a primary balance -- where expenditures (excluding interest payments and debt redemption) are covered by revenues excluding bonds -- by the early 2010s.

But even if that goal is achieved, the government's huge debt will continue to expand as long as the rate of economic growth stays below the rate of interest on government bonds.