Moving toward the goal of compiling the government's fiscal 2008 budget by the end of December, government agencies and ministries will be busy with their negotiations with the Finance Ministry. But the work to compile the budget will face difficulty because of the opaque political situation.
The biggest factor is the LDP-Komeito ruling coalition's defeat in the July 29 Upper House election. Since the Democratic Party of Japan is the No. 1 party in the chamber and the opposition force is in a position to control it, the Upper House can vote down bills passed by the Lower House. But as far as the budget is concerned, the Constitution stipulates that the Lower House's decision takes precedence over whatever the Upper House does.
But this does not apply to bills for budget execution. Thus the Upper House, for example, can vote down a bill for changing the tax system — a bill which is necessary every time a budget is compiled. If the bill is not enacted, the budget cannot be executed. Although the Lower House, with the ruling coalition having more than two-thirds of the chamber, can override the Upper House decision, the government and the ruling bloc will face a politically difficult situation.