Yesterday, on August 26, the LDP announced the appointment of 21 party members to its National Strategy Headquarters leadership, headed by Yasuo Fukuda, party President. Hidenao Nakagawa, deputy party leader under Minister Koizumi but sidelined in the traditionally conservative Fukuda regime, had been already been appointed as acting NSH chief, among other things to work out the LDP policy manifest for the next Lower House election. The appointment was seen as an expression of the Fukuda regime’s intent not to abandon the reform process. Moreover, the latest list of appointments includes not only regular party leaders such as the Chairmen of the General Council and the Policy Research Council but a number of other reformist allies of Mr. Nakagawa including Takahisa Shiozaki, Yoshimi Watanabe and Yuriko Koike. In fact, Ms. Koike has been put in charge of the “Mid- to Long-Term Vision Development Committee”, which appears to be the forum for drafting the policy manifest. All this could have spelled trouble as late as a couple of months ago. However, as the economy has worsened, the LDP conservatives have been edging away from fiscal probity in the short-run, so the two sides will now be easier to reconcile.
There’s little more that I can tell you about the NSH with any certainty, though. The NSH website was last updated on 2003 June 19. It is still headlined by Prime Minister Koizumi, and has two dead ex-Prime Ministers on its list of senior advisors*. A search for “国家戦略本部” (the original Japanese for National Strategy Headquarters) on the LDP website turns up zero hits. So where have I heard this story before.
5 comments:
"the LDP conservatives have been edging away from fiscal probity"
Seriously? In their words maybe but never in action. The LDP has never stood for much more than fiscal profligacy, at least since Tanaka. And arguably before, though rapid economic growth obscured rapid spending prior to the early 1970s.
Ross:
We’re talking about vastly different timeframes, in my case the ‘00s and the last couple of months. True, there were multitrillion-yen cheating (raiding the special account reserves) and indiscriminate across-the-board-cuts in lieu of an inter-ministerial reordering of national priorities (pretty much what you always get when you do not have support from a technically competent team of independent cost cutters) with most of that money going to plug a growing hole in the social safety net. But the Koizumi administration did set into motion a process that has put a chokehold on very important LDP constituencies and funding sources, giving MOF sympathizers their day in the sun. That is what has changed.
Perhaps Koizumi influenced the direction, at least while he was PM. But I suspect the size of the persistent budget deficits has constrained LDPers just as much. Impossible to know. I never believed the LDP would achieve primary budget balance by 2011 and don't know anyone who ever did.
Most interesting though, is how Japanese budget politics, both on the revenue and spending sides of the ledger, reveal what a weak state the LDP has actually governed: more an enforcer of private, favored interests than an assertion of common interests. That's not surprising given the incentives and resulting political equilibrium engendered by the SNTV-MMD system, but it is breaking down, ever so slowly. Real alternation in power would speed up this process.
I see your point about the political constraints imposed by the sheer size and persistence of the budget deficit and the ballooning debt overhang. About the 2011 primary balance: Overly ambitious and possibly politically doomed from the start? Perhaps. But impossible? With a little more real growth plus inflation, like Takenaka projected, who knew? So I wouldn’t be surprised if there were some people who seriously believed—rather than just hope with their fingers crossed—that it would happen. In any case, it’s a moot question.
Your point about Japanese/LDP budget politics is well taken, although the problem appears to be only a matter of degree. I hope that the ongoing emergence of a credible opposition with far fewer ties to vested interests will move the political debate towards common interests (long-term viability of the social welfare system and the related issue of tax incidence, national commitment to marginal communities, etc.), though the DPJ to my disappointment is currently moving in the opposite direction for reasons of electoral tactics. As you imply, this process is going to take several election cycles to work itself out.
Incidentally, I have a personal problem with targets like the FY2011 primary balance one. It obscures debate on how you actually get there and what lies beyond—most importantly in this case, how much of a role the temporary relief from an inflation tax plays before higher interest rates ratchet up debt service requirements over the long-run. And of course there’s the fiscal legerdemain that goes on to meet the target such as raiding “buried treasures”. But I guess we need something as a reference point, for policy debate and decisions.
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