Since the days of the administration of Prime Minister Junichiro Koizumi, financial reconstruction through reform of revenue generation and spending has been the core government policy. But the basic budget guidelines adopted by Prime Minister Taro Aso's administration represent a virtual scrapping of that policy line.
Symbolic is the decision to drop the policy of curbing automatic growth in social security spending by ¥220 billion a year. The guidelines say the government will carry out "necessary restoration" of social security in order to build a society in which people feel secure about their lives. Thus, automatic growth will be accepted in the fiscal 2010 budget.
This is logical in view of the shaky situation of the nation's medical and nursery services and the reduction of public support for the socially needy, including mother-and-child households on welfare. Social security services have become weaker due to the Koizumi administration's decision to cut automatic growth in social security spending by ¥1.1 trillion from fiscal 2007 through fiscal 2011.
The latest decision with regard to social security spending, however, should not be used as an excuse to bloat government spending without discipline. In a series of economic stimulus measures, the government has not demonstrated a serious effort to cut back on wasteful use of government money. Japan's long-term public debt is projected to amount to 168 percent of gross national product by the end of March 2010.
The guidelines say the government will stop the ratio of central and local government outstanding public debt to GDP from growing by the mid-2010s. They also say that a gradual increase in the rate of the consumption tax to around 12 percent from the current 5 percent by fiscal 2017 will be unavoidable. But the government should ask whether relying solely on a consumption tax raise is the only and best way. The guidelines look like a bag of various vote-getting measures because they don't contain a serious examination of the Koizumi policy line and fail to show a clear path toward creating a revitalized society and economy.
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