With the next general elections expected to be held soon, both Prime Minister Taro Aso and the Democratic Party of Japan led by Mr. Ichiro Ozawa are making policy proposals designed to appeal to as many voters as possible. Given the nation's past experiences and its financial conditions, both need to carefully flesh out their election promises.

Following an agreement with Komeito, Mr. Aso is pushing for a fixed-amount income tax reduction, which will benefit middle- and low-income families. This will be incorporated into a supplementary budget for fiscal 2008, which is likely to be discussed in the Diet soon.

Mr. Aso says that the government will start covering half the basic portion of pensions with tax money from April 2009, instead of the current one third. But he does not explain where the necessary funds to carry that out will be found. He also hints that he will not be bound by the government goal of bringing the primary balance in the budget (the comparison between revenues not relying on debts and spending excluding debt service cost) into the black in fiscal 2011.

The DPJ says that if it wins in the general elections, the party will initiate a child allowance system on a limited scale and abolish countryside expressway tolls and surcharges on gasoline tax under the fiscal 2009 budget. It also proposes income compensation for farmers and covering the entire basic portion of pensions with tax money in the years to come. To implement all the proposals of the DPJ, ¥22 trillion will be needed.

If the political parties rely on easy-going pork barrel policies, the effects will be short-lived and they will not lead to the long-term enhancement of people's welfare. People are now most concerned about the basic requirements for a stable life, such as a reliable public pension system, good medical care and food safety. The political parties need to pay serious attention to these matters. They also need to rectify the economic gaps between the rich and the poor and between the urban and rural areas so that it will contribute to long-term strengthening of the Japanese economy.