The Lower House on Thursday passed the ¥90.333 trillion fiscal 2012 budget with the support of the ruling Democratic Party of Japan and its coalition partner, the People’s New Party. But Prime Minister Yoshihiko Noda cannot be optimistic about upcoming Diet business and must overcome several hurdles. The Liberal Democratic Party and Komeito voted against the budget. Since the Upper House is controlled by the opposition forces, it will be difficult for the government and the DPJ to get the budget passed through the chamber before the end of fiscal 2011. The government is thinking of forming a provisional budget in case the budget does not pass the Upper House in time.
But even if the Upper House votes the budget down, the budget will become official on April 6 under a constitutional provision. Still, this does not guarantee that the budget can be executed. The budget relies on bonds for 49 percent of its funding. A bill to enable the issuance of the bonds is separate from the budget, and the LDP and Komeito are against the bill. As long as they maintain their stance, the budget cannot be executed.
It is reported that Mr. Noda and LDP President Sadakazu Tanigaki held a secret meeting Feb. 25. There is a view that Mr. Noda promised to dissolve the Lower House for a snap election if the LDP supports a bill to raise the consumption tax — an important goal for Mr. Noda. If this is true, it is regrettable that the two only focused on the tax increase and did not discuss slashing government waste and improving social welfare. Even if the LDP agrees to support the bill to raise the consumption tax, former DPJ chief Mr. Ichiro Ozawa and DPJ Diet members close to him are strongly opposed to the tax hike. Mr. Shizuka Kamei, head of the People’s New Party, is also against the tax hike. Irrespective of whether Mr. Noda and Mr. Tanigaki actually held a secret meeting, the LDP and Komeito are likely to assail the Noda administration to force Mr. Noda to dissolve the Lower House.
If the LDP and Komeito’s offensive leads to a fatal delay in the enactment of the bill to float the bonds, they could be blamed for inviting political and economic confusion. They should stop using the bill as a means of political maneuvering and instead agree to enact it at an early date. Both the ruling and opposition parties also should promptly agree on reapportionment of the Lower House seats so that the next Lower House election will be held in constitutionally acceptable conditions.