A number of lawmakers on the Liberal Democratic Party’s Executive Council on Tuesday voiced concern over a bill that would designate specific reduction targets in key budget areas, arguing the bill would make it impossible for the government to stimulate the economy via spending measures.
During a meeting of the party’s decision-making body, former party chief Yohei Kono questioned whether it would be appropriate to enact the bill at a time when the nation’s sluggish economy needs quick pump-priming.
The bill obliges the government to cut its fiscal deficit to 3 percent or less of gross domestic product by fiscal 2003 and to cease issuing deficit-covering bonds by that year. The high-profile bill, which is expected to pass the Lower House special committee on fiscal structural reform today, constitutes an important part of Prime Minister Ryutaro Hashimoto’s policy pledge to salvage the nation’s coffers from a sea of debt. It is expected to obtain full Lower House approval during a plenary session scheduled for Thursday.
Some LDP executives said that Japan’s economic conditions have considerably worsened since the bill was drafted in June by the LDP and its two smaller allies — the Social Democratic Party and New Party Sakigake. Former Construction Minister Shizuka Kamei said that implementing economic stimulus measures to improve the current economic situation would not go against the government’s medium- to long-term policy to recover fiscal health.
“These two matters should be discussed separately,” Kamei told the executives’ meeting. “The party leadership should tell the government that urgent, additional government spending is necessary to boost the economy.”
Despite such opinions from party members, LDP Secretary General Koichi Kato and policy chief Taku Yamasaki reiterated that implementing traditional fiscal stimulus steps, such as additional public works projects and income tax cuts, would ruin government efforts toward fiscal structural reform.
“The prime minister has pledged that the government will not carry out such measures,” Kato told the meeting. “As members of the ruling party, it is our responsibility to support the prime minister.”
Kato has said that what is necessary to save the nation’s economy is to implement economic structural reform through drastic deregulation, and that traditional pump-priming packages in the past did not necessarily lead to real recovery but increased government debt.