The Finance Ministry's budget for fiscal 2001, which was announced last week, falls far short of expectations, particularly because it does not lay out a road map for fiscal reform. It seems as if the ministry is marking time along with the stagnant economy. Critical issues, such as spending cuts, deficit reduction, revenue reallocation and economic stimulation, have been put on the back burner.
The bloated budget deficit, by far the largest of any industrialized nation, raises a troubling question: Will Japan be able to maintain its hard-won status as the world's second-largest economy? Indeed, the sorry state of the budget makes one wonder whether this nation will not slip to third place behind some fast-emerging economy.
It is hard not to avoid a comparison with the United States, which wiped out its chronic federal budget deficit in 1998. That country's budget surplus is now estimated to reach $2.2 trillion (242 trillion yen) in the next 10 years. President-elect George W. Bush reportedly stands by his campaign promise to cut taxes by $1.3 trillion over the next 10 years. It is a pledge that Japan's fiscal authorities can only dream about.