It’s becoming evident that the LDP has been playing hardball since the LDP-New Kōmeitō coalition forced the vote in the Lower House on the budget and budget-related bills including the tax bill covering the gasoline tax surcharge extension and passed them along to the Upper House. There, the DPJ, the Social Democrats and the New People’s Party are boycotting the Budget Committee, making it impossible to reach the required quorum to hold sessions. The rest of the business in the Upper House is reportedly at a standstill as well; the standoff should last all week, and possibly more.
This should not have been an unexpected turn of events. Boycotting parliamentary activities is a common political tactic, and it has been used extensively over the years by the opposition in the Japanese Diet as well. The big difference in the here and now, though, is that the opposition holds a collective majority in the Upper House. Armed with this powerful weapon, opposition leaders are claiming with varied nuances that the consent decree by the two Chairmen of the Houses that promised a decision on the tax bills by the end of this month no longer holds*. DPJ leaders are also making ominous noises about the replacement for BOJ Governor Toshihiko Fukui. So what did the LDP gain in exchange for all this ill-will and ominous threats from the opposition?
If DPJ claims are to be believed － the LDP has not denied them － it had offered to allow a Lower House vote after another, March 4, Budget Committee session. If, as is the custom, the bills were passed by the Lower House plenary and sent to the Upper House on the same day, the budget would become effective 30 days later on April 3 even if, as expected, the opposition rejected the budget in the Upper house, where it holds a collective majority. This would leave a two day gap during which there would be no government budget. But such things have happened before and there are laws in place to deal with such an event. A two-day hiatus by itself has no effect on the public weal. Far more serious would be the effects on the revenue side if the gasoline tax surcharge were allowed to expire. If the opposition-dominated Upper House refuses to vote on the tax bills (or any other ordinary legislation for that matter), the coalition must wait 60 days after the initial Lowe House vote before it can use its supermajority there to enact the legislation anyway**. The revenue loss will be substantial, and the administrative difficulties of suspending then re-imposing the surcharge would be substantial. There are no override provisions for Diet consent for BOJ, as well as other, appointments. So it appears that the coalition has taken a huge risk in exchange for a meaningless gesture in favor of fiscal probity. Now that the opposition, the DPJ in particular, is up in arms, one would expect that the coalition would go hat in hand to beg forgiveness, no?
But the hardball tactics continue. Yesterday, Mr. Yoshitada Kōnoike, the LDP Chairman of the Upper House Budget Committee*** called the committee to order. The entire Cabinet arrived before 9 AM and waited for about 50 minutes, when the Chairman canceled the session as the opposition failed to arrive and a quorum could not be reached. The opposition is understandably indignant, but the provocation continued today, as yet another Budget Committee session was called and canceled. The coalition is working on the Lower House too, as it is holding a session today of the Land, Infrastructure, and Transport Committee (where, this being the Lower House, it has a comfortable majority) absent its coalition members, who join their Upper House colleagues in the protest boycott.
The coalition has evidently shifted from a strategy centered on the low-profile, consensus-seeking posture that comes so naturally to Prime Minister Fukuda. Mr. Fukuda’s efforts had failed to achieve any understanding with the opposition on budget-related issues, let alone a Grand Coalition with the DPJ. Instead, it became clearer than ever that the DPJ would not stop at anything to force a snap election while public support for the coalition faded. As for the Fukuda administration itself, it looked increasingly weak and vacillating. The coalition leadership must have decided that, where the opposition was not forthcoming, it would be politically less damaging for the coalition’s political fortunes if it confronted the opposition rather than caved in the hopes of gaining a measure of cooperation.
There are real costs to this. The market would much prefer the BOJ succession settled as quickly as possible; any delay is potentially unsettling. As for the gasoline taxes, a one-month suspension** would open a one-shot, 20-plus billion yen hole in gasoline tax revenues during April; certainly not life-threatening certainly, but not peanuts either.
However, the DPJ has not made a good case independent of the political game to oppose ex-Vice Minister of Finance Toshirō Mutō, the government’s choice. As for the gasoline taxes and road construction, a healthy majority of the public wants the both side to come together on a compromise, and that’s exactly what the coalition has been advocating. Against this background, the coalition has evidently decided that the risk is worth taking in order to inject new life into the waning fortunes of the coalition and the Fukuda administration.
Neither the coalition nor the Fukuda Cabinet is going to abandon its quest for dialogue and collaboration on economic, financial and fiscal issues. But they are now holding a stick in the other hand***. They must be calculating that a total standoff that forces the coalition to find solutions on its own will be more damaging to the DPJ than to themselves. According to this line of thinking, the coalition can’t lose. In this, they have the unintended cooperation of the Communist Party, which is engaging the coalition instead of joining the boycott. Will it work? I have no idea. But that’s what appears to be going on.
* Satsuki Eda, the DPJ Chairman of the Upper House (technically an independent; by custom, a Chairman leaves his party when he is elected to the Chair), apparently thinks that the decree still holds.
** Committee Chairs are allocated in proportion to the number of seats each party holds in that House. The DPJ could have grabbed the Budget Committee Chair by forcing a vote on it.
*** According to my latest reading of the draft bill, it does not have to be amended before the Lower House can vote on it again even if April 1 passes without the bill having been adopted. I am now of the view that an unconstitutional retroactivity that I believed would arise from the gap can be interpreted away. I’ve changed my mind on this.
**** I suspect that the coalition tactic is the brainchild of Bunmei Ibuki, who has been advocating a hard-line approach every chance he gets. Besides, as LDP Secretary-General, he has the primary responsibility for parliamentary strategies in the first place.