Since the Inauguration of the Abe Administration
February 23 (Friday) 2007
Six months have passed since the inauguration of the Abe administration. In that time the world has changed, and a number of important government policies have been implemented. I would like to take this opportunity to review these developments.
The first drafting of the budget since the inception of the new administration is under way. If all goes well, it is predicted that the budget will be set in the beginning of March. It will mark the first passing of the budget for the Abe administration.
The sum total of the general account budget is 82.9 trillion yen, and its characteristic is that one could call it a fiscal restructuring budget. The economy was robust in 2006, and activity has become lively as economic recovery has entered its fifth year. This has raised tax revenues to 53.5 trillion yen, a 7.6 trillion yen increase in comparison to the 45.9 trillion yen tax revenue of the previous year. Despite this, the budget increase was capped at 600 billion yen.
The sum of newly issued government bonds came to 25.43 trillion yen, a 4.54 trillion yen decrease. This decrease is the largest in history. The goal to push the primary balance into surplus by 2011 has been in place since the Koizumi administration, and optimistic government scenarios see the possibility for economic growth accelerating to reach annual growth of 3.9% in five years. In this event, it would become possible to tip the primary balance into surplus without raising the consumption tax rate. A more pessimistic scenario would require an increase in the consumption tax rate. In either case, the fiscal restructuring budget has been drafted with the goal of achieving a primary balance surplus by 2011.
Abe's Cabinet is emphasizing its originality through a number of distinctive policies, such as educational reform, constitutional revision, upgrading the Defense Agency to the Defense Ministry, support for the "challenge again" policy, regional rejuvenation, and technological innovation. A budget has been allocated for each, albeit in modest amounts. For example, for educational reform 6.6 billion yen has been allocated for the survey on academic performance and about 800 million yen for school assessment. Natural increases in social security have been approved at 600 billion yen, but conversely state contributions to employment insurance have been slashed by 180 billion yen and the budget is being held down as much as possible.
Diplomacy, defense, and constitutional revision are the basic strategic pillars that the Abe Administration is pouring its energy into. In terms of forging new friendship relationships with China and South Korea, the Abe Administration has already produced some important accomplishments.
However, Abe's approval ratings are steadily falling. An approval rating of 71% at inauguration (Nikkei Shimbun survey) had dropped to 39.1% by January (FNN survey). At the root of this has been a wave of scandals. The improper residence in civil servant housing controversy involving Masaaki Honma, Director of the Government Tax Commission, was uncovered, and he immediately resigned. However, as the one who assigned the important post to an inappropriate person, the prime minister and his appointment responsibility have come under question. Minister of State for Regulatory Reform Genichiro Sata has also resigned after the improper expenditure scandal came to light. Though he has not resigned, Minister of Health, Labor and Welfare Hakuo Yanagisawa has been the subject of heavy public criticism after his comment that "women are machines for childbearing". These problems are having a lingering effect on a political world where the Upper House elections loom.
Another cause for concern is Defense Minister Akio Hisama's comment that "the Iraqi War was a mistake". Japan's Ministry of Defense is in the position of trying to maintain its lifeline and protect world order through its alliances, and these comments could produce discordance in its alliance with the US. They are also considered the main reason why Vice President Dick Cheney did not meet Defense Minister Akio Hisama during his February 20 – 22 visit to Japan. There is concern that at this rate Defense Minister Akio Hisama's comments could prove to be an element of uncertainty for the Abe Administration in the future.
Moreover, there is also the somewhat messy issue of the office of the prime minister with its overlapping divisions headed by official aides (appointed by the prime minister) and etc. It is fine to have policies that eliminate the direct influence of bureaucrats, but on the other hand these bureaucrats are not being used or controlled appropriately. This will weaken the ability of the administration to get things done.
Once the budget has been set, the political world will shift attention to the July Upper House elections. With his sights set on the election, Democratic Party leader Ichiro Ozawa is proposing egalitarian and government-centered policies in the mold of the former Socialist Party, not the kind of liberal and self-responsibility policies that Ozawa himself used to propound. For example, he is advocating the so-called "scatter" policy which would distribute large subsidies for childrearing or agricultural support. This comes as a threat to the Liberal Democratic Party (LDP), which is afraid that it will shake the foundation of the election. When election season arrives there is the danger that the main agendas that should be promoted will be put on the back burner in order to secure popularity among voters. In the upcoming July elections, it will of course not be easy for the LDP to maintain the large number of seats it gained during the Koizumi period six years ago. Even if some seats are lost, the ruling party has still secured an overwhelming majority in the Lower House, and as such it is important that it sticks to its basic strategies from a broad standpoint. Instead of getting excessively wrapped up in election matters, the ruling party should govern by keeping sight of the big picture.