Thursday, December 21, 2006

Piling on Re FY 2007 Budget Plans

It's easy to say that we (Abe) will cut new issues of government bonds in FY 2007 by more than the 4.4 trillion yen we (Koizumi) cut in FY 2006 when you consider that revenue is estimated to increase 7.6 trillion yen, right? Give the budget plan credit for returning 1.6 trillion in other borrowing tucked away in the special budget for revenue transfers to local governments, and you still have a margin of 1.6 trillion yen, right? But that's being divided between tax reduction (0.41 trillion), automatic increase of revenue transfer to local governments (0.37 trillion), rising public pension and welfare costs (0.56 trillion), and other odds and ends, right?

Well, just because something is easy to say doesn't mean it's… Okay, I give up.

While Mr. Abe has been intimating that, in a reprisal of supply-side economics, we'll grow ourselves out of this fiscal mess, it is also true that he has reiterated his commitment to taking the fat out of government as a prerequisite to taking on the revenue side of the equation. Being a lawyer, I can't vouch for my arithmetic. But the budget does not seem to bear the stamp of a Koizumi acolyte.

But what do I know. Let me know if you find an analysis that actually goes through all the figures.

(Sidebar: There's a certain amount of intellectual laziness in the way the media reports this. Most prominently, the FY 2006 supplementary budget passed by the Diet to little public notice on Dec. 21 (thanks to Professor Honma?) has quietly slashed an extra 2.5 trillion yen in public borrowing from the original budget. Arguably, the FY 2007 Abe adminstration is already 0.9 trillion yen behind the FY 2006 Koizumi/Abe administration.

No comments: