Thursday, December 13, 2007

Why the Public Pension Accounting Scandal Blew Up Again on Tuesday

If you are a Japan politics otaku, you will remember that it was the revelations over the 50 million public pension accounts that had not been traced to their owners that really pushed the LDP over the cliff in the July Upper House election, the cake under the icing, if you will, of all those lesser scandals and misstatements. When Prime Minister Abe went over and above what his administration was promising (consolidation of all accounts by computer by March, the end of the Japanese fiscal year) and vowed to go after every last account and restore it to its rightful owner, most people thought he was overreaching. When Yōichi Masuzoe, a social welfare expert and one of the smartest Diet members in the LDP, assumed the Health, Labor and Welfare portfolio in the post-election Cabinet, he surely knew that it would be impossible to fulfill Mr. Abe’s campaign promise. Yet when Yasuo Fukuda took over as Prime Minister in September, choosing to keep on most of Mr. Abe’s Cabinet members and other political appointees including MHLW Minister Masuzoe, neither individual did anything to back away from Mr. Abe campaign promise*. On 31 October, a Ministry of Health, Labor and Welfare committee consisting of independent experts and other notables issued a report that included ballpark figures that gave a fairly good idea of the causes and magnitude of the hardcore, intractable cases. Yet Mr. Masuzoe waited and chose this point in time to officially own up to the fact that millions of accounts not only would remain unattributed by the March deadline but might never be restored to their rightful owners.

All this predictably caused a furor, and the opposition is on the attack, most notably with calls for a censure motion against Mr. Masuzoe, and Diet testimonies by Prime Minister Fukuda, Chief Cabinet Secretary Nobutaka Machimura, and of course Mr. Masuzoe**. Clearly, the opposition hopes to have a field day during the expected month-long extension of the extraordinary Diet session into mid-January. And that, in my view, is exactly why the announcement was made on Tuesday.

It has been clear for some time that this Diet session will be re-extended, the Upper House will vote it down, the Lower House will override it by a supermajority vote, the Upper House will pass a censure motion against the Fukuda administration/Prime Minister Fukuda, Prime Minister Fukuda will not call a snap election, and life will go on. Now there will be several other bills remaining on the agenda at the current 15 December recess date, but the ruling coalition has no intention of forcing them through during the re-extension, much less allowing the opposition to enact its own agenda items. Thus, activities during the extension had promised to be mostly, if not exclusively, about the refueling bill and the opposition’s efforts to link them to the Ministry of Defense scandals. This meant that there would be a lot of Diet members in both Houses sitting on their hands with little to do but wait to vote in the plenaries. Given such prospects, what more could a hungry opposition have asked for, if not another juicy chunk of the ruling coalition to sink their teeth into?

Normally, of course, that would be a political disaster for the Fukuda administration. However, in the case of the pension accounts scandal, it was bound to blow up anyway in March, during the regular Diet session, the real deal, when the budget and the budget-related bills, particularly the time-limited special tax measures, would be facing crunch time. Unlike the refueling activities, the public pension accounts are a domestic issue, a money issue, fruits of our real blood, sweat and tears***. At a minimum, it would have a disastrous effect on the legislative agenda****. Secondly, the aura of haplessness that would be cast on the Fukuda administration by the accretion of successive scandals would be compounded by the fact that, with time, the problem would become less and less Mr. Abe’s and more and more Mr. Fukuda’s. These two elements are enough to convince me that the Fukuda administration and LDP strategists decided that it would be better to take their lumps now, than to wait for the regular Diet session.
Then why this particular moment? Over the previous couple of weeks, the LDP had finally managed to win over skittish coalition partner New Kōmeitō to re-extending the extraordinary Diet session. It achieved this by assuring them that Prime Minister Fukuda would not call a snap election even if the opposition passed a censure motion in the Upper House after the coalition supermajority in the Lower House overrode an Upper House rejection of the refueling resumption bill. With that final piece of the puzzle in place, the time to clear the air had finally come.

This is not to say that the ruling coalition is not taking a hit. I would be surprised if Fukuda administration’s poll numbers do not take a dip. I would only be mildly surprised if Mr. Masuzoe (unfairly, if prudently, in my view) is forced to resign. However, the coalition is putting the blame on a desperate Prime Minister Abe making a campaign promise that could not be kept. That, together with best efforts by the authorities and a full, clear accounting of the limits of the ongoing efforts to identify the account owners, will be enough to keep the scandal from derailing Mr. Fukuda’s desire to hold the next Lower House general election at his convenience, sometime after the next G8 Summit in Hokkaidō in 2008 July and the end of the current four-year Lower House tenure in 2009 September*****.

* When questioned, Mr. Masuzoe would come close to repudiating it, but would pull back, citing the need and his will to fulfill a political promise.

** There is a public communications angle to this, and it’s clear that the Fukuda regime bungled some aspects of it. Specifically, poor public communications efforts by the Mr. Masuzoe and the Chief Cabinet Secretary appeared to compound the problem. This was not been one of Mr. Fukuda’s shining moments either, but he appears to have escaped the brunt of the initial media assault, mostly because of the way they timed Mr. Masuzoe’s press conference. But more broadly, I think that they should have done more spadework, so that they could ease into the new narrative when the official revelations were made. I’ll try to address this as part of a separate post on the scandal.

*** In a way, Ichirō Ozawa’s decision to force a showdown on the refueling extension was a strategic error that is somewhat analogous to Mr. Abe’s highlighting constitutional amendment and patriotism in education. None of them were hot-button issues with the vast majority of the Japanese public. The two men overestimated the quality, if not the numbers, of the support that their proposals received.

**** Note that the public pension accounts scandal is handled by the Health, Labor and Welfare Committees in the two Houses, about as far as possible in terms of jurisdiction as you can get from defense issues. Thus, pulling it back to a re-extended extraordinary Diet session means that the opposition will have a hard time using the former to mess up the schedule on other work that must be done.

***** It is possible that the reluctance in some opposition quarters to force a re-extension (e.g. People’s New Party co-leader Tamisuke Watanuki) or even to oppose the measure in the first place (e.g. DPJ deputy leader Seiji Maehara) helped to force the LDP’s hand as well. Without a Diet in session as a platform to press the pension accounts issue, the opposition would have had no choice but to wait for the regular session to be opened. Conversely, the opposition could be wishing that they could save the pension accounts for the regular session.

I stay away from these unverifiable conspiracy-type conjectures, which are usually no more than selective facts strung together with charming plausibilities. But in this case, the circumstantial evidence was too strong for me to resist. I am nevertheless more ready than usual to be proved the fool.

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