Friday, August 01, 2008

On the Eve of Not-Quite Extreme Cabinet Makeover

The delay in the return of the METI and MAFF Ministers from the deadlocked Doha Round negotiations in Geneva had narrowed the early window for a cabinet reshuffle to a few days before the Beijing Olympics would begin and blot out any political news short of regime change. The next opportunity would be late August, after the Games end. The clincher was Foreign Minister Masahiko Komura’s last-minute decision to cancel his August 1-8 visit to India, Sri Lanka and Uzbekistan. Hiroko Ota, the Economy and Finance Minister, was also grounded. You never cashier a Minister in absentia unless you absolutely must. Prime Minster Fukuda went into a huddle with the party leadership; there was no way to back off now without losing face. With everything set for an early cabinet reshuffle, the event itself was threatening to turn into an anticlimax. Mr. Fukuda salvaged a modicum of momentum by defying predictions by carrying back the date all the way to August 1.

The most obvious conclusion to draw from this turn of events is that Mr. Fukuda has chosen August as the time to summon the annual extraordinary session to deal with the politically contentious re-extension of the counterterrorist refueling operations in the Indian Ocean by the Maritime Self-Defense Force, as well as his pet project—legislation to establish a Consumers Protection Agency. His hardliner LDP deputy Bunmei Ibuki had been pushing this line of attack, while election czar Makoto Koga and, more important, coalition partner Komeito had wanted to ditch the refueling operations and opt for a late-September summons. A new cabinet needs a minimum of a few weeks to get its sea legs before it sets forth to do battle in the Diet. Ministers can no longer rely the bureaucracy to answer all the tricky, detailed questions, so a post-Olympic cabinet reshuffle would have destroyed any chances of an August Diet session.

Will this turn the tide for Mr. Fukuda? I doubt it. If the musical-chairs itself produces a bump, it will be fleeting. Extending the refueling operations, a show of political courage as it is, will not be popular with the Japanese public. As for the Consumers Agency, the public split 46-46 in last month’s poll from the LDP-friendly Yomiuri. The saving grace for Mr. Fukuda is that his constituency must be down to the core LDP support, which means that pushing the refueling operations can’t make thing any worse, and that efforts on the two items will bring back some of the Fukuda skeptics that would otherwise be supporting a coalition administration.

The real test comes on the gasoline surcharge and its conversion to the general budget and the elephant in the room—financing the 2.3 trillion yen price tag on the 2009 increase in subsidies to the public pension system, which means, as a practical matter, a consumption tax hike—rule of thumb: 1percentage point=2 trillion yen. The Fukuda administration decided to avoid these tricky issues when it authorized the budget planning ceiling for FY 2009 on Tuesday. They will both come to a head next year, when the next regular Diet session convenes in early January. Likewise, any efforts at cleaning up the expenditure side of the national coffers.

By going ahead with a cabinet makeover, Mr. Fukuda will be making it known: He is determined to go into the next Lower Houser election as Prime Minister. Indeed, it will make it more difficult for someone else to swoop in, take his place and do yet another reshuffle. The bad news for Mr. Fukuda is that this does little to improve his chances of coming out of the election as one.

(sidebar) Suffering collateral damage are the realignmentists. It seems like only yesterday that political realignment was all the rage. Now, the media has dropped most such talk, and the two men who had been attracting media attention and openly talking about starting new political parties, Takeo Hiranuma and the far less credible Daijiro Hashimoto, have been relegated to the pages of the “vernacular tabloid” Shuukan Posuto and reduced to talking up faux-Prime Minister Kimutaku over Mssrs. Fukuda and Ichiro Ozawa.


Janne Morén said...

Doesn't Fukuda staying on actually decrease the chances for LDP in the upcoming election? Having a fresh, new candidate that the public has yet to know and tire of would probably be worth a four or five point bump in the election.

Also, I realize the consumption tax is a hot potato in Japan. I wonder why nobody argues for a tiered tax as a way to increase accepatnace? Keep daily necessities and items of social importance like food, newspapers and books at five percent (with media at the cheap rate you get them on board the idea), then hike discretionary items - the rest - to a nice, even ten. Combine with a law (hey, sell it as consumer protection) requiring retailers to show all prices tax included so the tax difference won't constantly stick in people's eyes. It works in Europe.

Jun Okumura said...

Doesn't Fukuda staying on actually decrease the chances for LDP in the upcoming election? Having a fresh, new candidate that the public has yet to know and tire of would probably be worth a four or five point bump in the election.

Probably, Janne, although I think that Mr. Aso, the most plausible replacement, is probably overrated. He’s a very popular campaigner, but, for better or worse, he does not have much of a track record on the domestic issues that voters are really concerned about. His entire economic portfolio as a cabinet minister covers thirteen months in a couple of rather junior positions; he has never been talked up as a Finance Minister candidate. The LDP simply does not have “a fresh, new candidate that the public has yet to know and tire of” that also has some credibility. Nobuteru Ishihara? He’s the political equivalent of the guy with a nice job who’s still living with his mother. Which reminds me that Mr. Aso was 66 when he finally got his own micro-faction. Another problem is that the public’s disenchantment extends to the LDP itself. The LDP needs much more than a change at the top.

But the real reason that the LDP can’t change Prime Ministers is this. Mr. Fukuda simply won’t leave. Only a majority of both the LP’s Diet members and the representatives of the prefectural chapters (one from each chapter) can call for an election before the party president’s term expires (LDP statute Article 4, paragraph 4). Remember Prime Minister Abe staying on after 2007 Upper House debacle, much to the silent dismay of his LDP colleagues and the astonishment of the Japanese media? Moreover, Mr. Fukuda has co-opted most of the faction heads into his cabinet and the party leadership, which minimizes the possibility of a successful rebellion among the rank-and-file.

Of course it would be near-impossible for Mr. Fukuda to withstand an all-out media campaign calling for his resignation. But the public's perception is that he’s not that awful, merely mediocre, and has few if. He is generally well-liked by the media, and ha few if any personal enemies. His still-high likeability quotient gives him an extra margin of error with the media.

And that is where things stand.

As for the consumption tax, there has been talk of taxing essentials at a lower rate at part of a hike. The next step is 7%. (We like the 3,5,7,10 progression. Look at the Japanese Criminal Code.) I believe that there will be enormous political pressure to keep the tax rate on essentials at the current 5%.