The Liberal Democratic Party-New Komeito ruling bloc rammed an unpopular bill needed to finance the fiscal 2008 second extra budget through the powerful Lower House on Wednesday after it was rejected earlier by the opposition-controlled Upper House.

Despite fears that several LDP members would rebel to undermine the two-thirds majority needed to override the Upper House, only two did — former Prime Minister Junichiro Koizumi and Jiro Ono, one of his ex-secretaries.

The pair abstained because the bill finances Prime Minister Taro Aso’s controversial ¥2 trillion cash handout program.

LDP executives feared Koizumi’s notice would prompt many of the ruling party’s junior members to join him in boycotting the program, which has been criticized as a waste of taxpayer money.

“As I thought about (the situation) comprehensively, I decided that I should not be present in this session,” said Ono, who represents Yamanashi Prefecture.

Ono said the cash handout program did not win over the public and thus should not be forced through the Diet.

Although Aso appears to have contained a possible rebellion this time, he will continue to have a difficult time holding the party together as his approval ratings dwindle to historic lows, political analysts said.

“I think Aso will still have a hard time managing the party,” said Hidekazu Kawai, professor emeritus at Gakushuin University in Tokyo.

LDP members will not fully support Aso unless the ruling bloc defeats the Democratic Party of Japan in the next Lower House election, which must be held by September.

With passage of the bill, the government is now able to tap ¥4.16 trillion from the reserve fund for the “zaito” government investment loan scheme for the second extra budget, including the ¥2 trillion cash handout program and the ¥500 billion plan for special weekend discounts for expressway tolls nationwide.

The villages of Nishiokoppe in Hokkaido and Nishimeya in Aomori Prefecture will become the first municipalities to start offering cash payments based on the state’s stimulus policy to their residents Thursday, Chief Cabinet Secretary Takeo Kawamura said.

Masaki Taniguchi, associate professor of political science at the University of Tokyo, said the donation scandal involving DPJ President Ichiro Ozawa’s chief secretary has injected more uncertainty into the political arena.

The aide was arrested Tuesday on suspicion of accepting donations from Nishimatsu Construction Co.

Taniguchi predicted LDP members could also be hit by the scandal as the investigation continues. However, if none is implicated, Aso’s best chance to dissolve the Lower House and call an election could be within the next 30 days while the DPJ is beset by its own troubles, he said.

“The rebellion over the cash handout program was kept to a minimum. So it is probably best for the LDP to go into an election now,” said Taniguchi.

The cash handout scheme was a key goal for Aso. After the Diet approved it, he said the enacted legislation was part of a series of economic policies that would help Japan weather the recession.

The LDP decided Wednesday to verbally reprimand Ono but not Koizumi.

“Koizumi said beforehand that he would be absent, but I heard Ono (left) on the spot, and that was why he penalized,” said Aso, who is also the president of the LDP.

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