Diet gridlock fuels rumors of snap vote deal with LDP in return for support to pass sales tax bills

Noda fate in doubt, just six months on



The political environment has become increasingly harsh for Prime Minister Yoshihiko Noda, with the focus on whether he will soon dissolve the Lower House for a snap election to achieve his prized policy goal of raising the consumption tax.

Only six months have passed since Noda assumed office Sept. 2, but the outlook for his administration is gloomy. The Cabinet’s approval ratings have been plummeting and many lawmakers, including members of his Democratic Party of Japan, are opposed to the planned tax hike.

Noda has also failed to win the opposition camp’s cooperation in the divided Diet, where the ruling bloc lacks a majority in the Upper House. Facing a wave of political realignment moves, the DPJ’s third prime minister since the party swept to power in 2009 is struggling to find a way out of the political deadlock.

Amid concerns that Japan may suffer a fiscal crisis similar to the eurozone’s sovereign debt disaster, Noda has pledged to reform the social security and tax systems “with an unflagging resolve.”

But with the opposition camp blocking reform bills and the Diet gridlocked, he may be considering dissolving the Lower House to seek the public’s verdict on the tax increase in a general election.

Nine DPJ lawmakers left the ruling party at the end of last year to protest Noda’s tax policy.

In addition, former DPJ leader Ichiro Ozawa, who heads the largest intraparty group, and Shizuka Kamei, leader of the DPJ’s junior coalition partner, Kokumin Shinto (People’s New Party), have started to criticize Noda’s tax proposal, undermining the unity of the ruling camp.

Two weeks ago, Ozawa threatened to overthrow Noda’s Cabinet if the prime minister moves to dissolve the Lower House to hike the sales tax, DPJ lawmakers said.

“We need to consider rebuilding an administration that puts priority on people’s lives,” Ozawa was quoted as saying by the lawmakers.

While Noda has expressed his willingness to hold talks with the party heavyweight, “it would be difficult for them to reach a middle ground,” a DPJ lawmaker said.

Other lawmakers say that a precipitous plunge in the Cabinet’s approval rating could make Noda reluctant to call a snap election, with fears growing that the DPJ might suffer a crushing defeat.

Public support for the Cabinet has recently fallen below 30 percent, the level traditionally considered a “danger zone” for an administration’s survival. This is in sharp contrast to Noda’s approval rating of more than 60 percent soon after he took office.

“I’m confident there will be no dissolution (of the Lower House) this year,” DPJ Deputy Secretary General Shinji Tarutoko said last month, hinting at such fears.

On Feb. 26, Noda secretly met with Liberal Democratic Party chief Sadakazu Tanigaki, according to several sources close to them, sparking speculation he may be trying to strike a deal with the main opposition party’s leader to dissolve the Lower House in exchange for the LDP’s support of sales tax legislation in the Diet.

Although Noda and Tanigaki denied the meeting took place, the sources said they agreed on the necessity of raising the sales levy to cover swelling social security costs.

LDP lawmakers reacted sharply to reports of the meeting. An Upper House member said “there’s no merit” in Tanigaki holding talks with Noda, urging the party’s chief not to be taken in by what he termed as Noda’s fast talk.

At this point, the prime minister has few weapons left in his arsenal to turn the situation around.

Noda is expected to face difficulties in convincing opposition parties to pass tax bills and could be forced to decide whether to dissolve the Lower House in June, around the end of the current legislative session.

The Cabinet last month approved an outline of integrated social security and tax reforms, while Noda has promised to submit a bill to the Diet by the end of March to raise the 5 percent consumption tax to 8 percent in 2014 and then 10 percent in 2015.

Pay cut for lawmakers

The Democratic Party of Japan may cut Diet members’ salaries by ¥3 million for two years in an effort to win public support for its plan to hike the consumption tax.

Lawmakers’ annual pay would be cut about 14 percent, more than the 10 percent target previously set by Prime Minister Yoshihiko Noda, senior DPJ officials said.

The new goal likely will be presented to a meeting of senior party members on Monday, the officials said, adding that the DPJ may then seek support from the opposition camp.

The DPJ wants lawmakers to take a bigger hit than the pay cut averaging 7.8 percent for public servants that cleared the Diet on Wednesday, they said. Lawmakers receive around ¥21 million a year in total remuneration, including two bonuses and other allowances.