As the Cabinet approved on Tuesday a record-breaking ¥108 trillion emergency stimulus package in response to COVID-19 ravaging the nation’s economy, the deep-seated rivalries it has amplified within the ruling Liberal Democratic Party were hidden from view.
The fundamental elements of the government’s plan come from proposals made within the party, spearheaded by the LDP’s policy research council chairman Fumio Kishida, who is also seen as a viable successor to Prime Minister Shinzo Abe.
But the lead-up to the massive proposal, put forward on March 31, was shaped by behind-the-scenes political maneuvers, amid an internal struggle between LDP forces backing Kishida and those plotting to deflate his rising influence. Some members were still showing displeasure over the proposal at a party meeting this week.
As Kishida seeks to seize momentum, and gain wider appeal by demonstrating leadership abilities and making media appearances, multiple hurdles have stood in his way as was demonstrated in the compilation of the party’s coronavirus response.
The difference between the two sides manifested itself most significantly in the proposal’s centerpiece: the cash handout. It was initially discussed on a much larger scale, to total around ¥12 trillion — or ¥100,000 per person.
In the final proposal, however, the amount was lowered to ¥4 trillion, providing ¥300,000 instead to individual households where incomes have been halved due to the virus outbreak or to a level that would qualify the household to be exempt from paying residential tax. It is projected that the number of eligible households will be just 13 million out of about 53 million nationwide.
Abe confirmed during his news conference Tuesday night that the monetary handout would be targeted to a limited number of households. If it was dispensed as a universal cash payment, he explained, it would take about three months to distribute to everyone. But if it was given only to eligible households, the process would be much quicker and fairer, he said.
“The decision to allocate ¥300,000 per household resulted from various discussions,” Kishida told reporters Friday after meeting with the prime minister. “I stressed (to the prime minister) that it’s important to provide the money as fast as possible” and that it would bolster his public image as a strong leader.
The policy research council chairman has been at the forefront of the administration’s economic response to COVID-19 since mid-March, after being appointed the task by Abe. Kishida’s job description also entails managing divisions over the policy among the party’s base where various interests collide.
Kishida has been pushing for a uniform monetary handout as a way to provide immediate relief for those struggling due to the pandemic. That position has pitted him against some lawmakers with deep ties to the agricultural industry, which has advocated for distributing gift vouchers to aid farmers.
“At the phase of preventing infections from spreading … we need to invest with people, things, money and resources at a maximum level,” Kishida said in an interview with Toyo Keizai business magazine last month. “At this stage, the movements of people and things have been paused, so counter-cyclical measures are meaningless … one must concentrate on securing immediate cash for companies and at an individual level.”
Amid the debate, the party’s agriculture, forestry and fisheries divisions were particularly keen on issuing gift vouchers, so-called meat-tickets or fish-tickets, to stimulate consumption that usually falters in times of economic slowdown. Those industries are part of the party’s core base in the countryside — an LDP stronghold. They also argued that people would not spend the distributed cash but instead save it.
When reports of the certificate proposal surfaced, politicians and those on social media quickly mocked the idea.
“I thought it was a joke,” said Osaka Mayor Ichiro Matsui, who also leads the right-leaning opposition party Nippon Ishin no Kai, on March 27.
In the end, those tickets were not incorporated into the party’s proposal, while others that targeted different industries were — in hopes of encouraging “unprecedented and large-scale nationwide tourism and consumption campaign.”
Kishida’s path was also blocked by two LDP heavyweight rivals who preferred the vouchers over a universal cash payment. Both Deputy Prime Minister and Finance Minister Taro Aso and LDP Secretary-General Toshihiro Nikai stood in opposition.
“The (party’s) economic plan sets a precedent,” said Nikai, speaking on behalf of disgruntled LDP lawmakers at a news conference on March 23. “I don’t think we should be compelled to provide cash handouts every time something happens.”
Aso, who became the prime minister shortly after Lehman Brothers collapsed in 2008, at the time distributed around ¥12,000 to all citizens in a bid to boost the economy.
The vouchers, on the other hand, would propel the recipients to spend rather than save, which would stimulate the economy, the finance minister said on March 24. It is widely believed that the finance ministry was reluctant to pump out money and slash the consumption tax, a move even some LDP lawmakers are demanding.
To settle the internal power struggle, Abe made a call for a cash handout during a news conference on March 28, satisfying Kishida’s push for the monetary distribution while appealing to anti-Kishida forces within the LDP, which had advocated for placing some restrictions.
Kishida, though, still found himself in the hot seat this week. Some LDP members displeased by his compromise, who had pushed for across-the-board cash benefits, admonished him during a party meeting on Monday.
It seems unlikely that Kishida has completely given up on a blanket cash handout, hinting that it could be included in an additional economic measure.
“At this point, there’s still an argument for an across-the-board cash payment within the party,” Kishida said during a BS Fuji news program Tuesday night. “I think we should be open to discussing how to carry out an additional cash payment if it’s necessary.”