An email exchange with a financial analyst reminded me that ’s a lot of apprehension out there over the policy prospects of a minority DPJ—let’s face it, the PNP no longer counts—government. Far be it for me to say that gridlock is good, but there’s a case to be made that within the context of a fractious opposition including Komeito—demonstrably flexible and similarly urban, middle class, social spenders domestically and pacifist overseas—a series of flexible issues-oriented alliances will be more consonant with the implementation of a coherent policy agenda than an official coalition. A minority partner will inevitably secure policy concessions that do not match up with the majority partner’s overall policy agenda. It will also be able to exercise control over its cabinet assignments as a virtual enclave, further sapping coherence. Case in point: the Hatoyama administration.
Of course if the opposition ever got its act together, it will be hell for the DPJ. But I don’t think that’s going to happen, when everybody has an eye on a possible, more extensive political reshuffle down the line, most likely sometime after the next lower house general election.
Showing posts with label coalition 2010-. Show all posts
Showing posts with label coalition 2010-. Show all posts
Monday, August 02, 2010
Friday, July 30, 2010
PNP, SDP Tries to Sell DPJ on Lower House Supermajority
The Odd Couple are doing the nasty again. Shizuka Kamei’s People’s New Party and Mizuho Fukushima’s Social Democratic Party, both devastated in the July 11 lower house election*, agreed to join forces to push the three postal “reform” bill (Kamei’s pet project, which will keep the Japan Post group under government control and expand its massive savings deposit and life insurance businesses) and the worker dispatching regulation bill (reverses much of the deregulation of the worker dispatching business (broadly similar to temp agencies) under LDP administrations, its effect on dispatched workers as a class and employment in general is hotly disputed). Prime Minister Kan agreed to work with them to expeditiously introduce the bills. But will they pass in their current form? And will the cabinet raise the ceilings for the Japan Post’s savings and life insurance businesses, if and when the Diet passes the bills?
The DPJ and PNP, which is still in the coalition, have 110 upper house seats between them**. The SDP has four, which gives the group 113 votes. They can probably count on one independent to vote with them. Let’s say that Hiranuma’s Stand Up Japan adds its three votes to the tally. That still leaves them at 114—eight votes short of the 122 votes to ensure a majority, assuming none of the 242 upper house members fails to cast a valid vote for or against the bills. The idea, then, is to throw the bills back to the lower house, where the three parties have between them 318 seats (DPJ 307, PNP four, and SDP seven). Add the two members in the Hiranuma group there, and they have 320 votes, just enough to cross the 319-vote*** threshold for a supermajority. But can the DPJ afford to do that?
Remember how sparingly the LDP-Komeito coalition was in exercising its supermajority after it lost the upper house majority in the 2007 election. If anything, it would bend over backward to accommodate the DPJ on legislative bills, or even abandon them altogether for all but the barest necessities. It did this as a concession to media pressure in line with the perception that the LDP would not be able to regain its public mandate until it faced another lower house election. Likewise the post-7.11 DPJ. It must be looking beyond the two bills. And it must be aware that a supermajority override at the first opportunity after the Upper House election is an effective way of killing any immediate prospects of building a workable upper house coalition or, more likely, fluid issue-based alliances. Besides, there is no assurance that the SDP (and Hiranuma’s friends for that matter) will vote with the coalition on future override attempts (or for that matter that Kamei won’t continue to be the camel that refuses to be housebroken)
A lower house override on the postal “reform” bills will cause immediate and specific harm to the DPJ, since the mainstream media will oppose resubmission in their current form. The DPJ will in essence take a hit on the massive floating vote, with questionable political returns from the postal office electoral machine. It is useful here to remember that the DPJ originally wanted to reduce the Japan Post’s financial operations by half and sell off all of what remained in a public offering. It only reversed its position as part of a broader attempt to destroy the LDP altogether by taking away its special interest support. However, the election showed the waning influence of the postal office vote machine—PNP wipeout!—and, more broadly, special interest politics in general.
The workers dispatching bill should have a more mixed media response, and big labor, which now gives much of its support to the DPJ, supports it, so I expect it to fare better. However, with the SDP out of the coalition and in disarray, there is now a very good chance that the bill will revert to the original business-big labor compromise, rejecting the even tighter restrictions that the SDP and PNP forced on an unwilling DPJ. Here again, though, I can’t be sure that the DPJ is willing to pay the political price of an early lower house override, if it comes to that. Even if the Japan Communist Party pitches in with its six upper house seats, the alliance will still be a couple of seats short there—and that’s assuming that Stand Up Japan will not vote against it or abstain. I’m now leaning toward a scenario—there are other possibilities—where the DPJ will accept an amendment, possibly in the upper house, to secure passage without resorting to the lower house supermajority override.
Those are my immediate thoughts on the initial steps beyond the September election for the DPJ leadership. I still think that Kan will survive an Ozawa-inspired challenge, but his troubles then will only have begun.
The DPJ and PNP, which is still in the coalition, have 110 upper house seats between them**. The SDP has four, which gives the group 113 votes. They can probably count on one independent to vote with them. Let’s say that Hiranuma’s Stand Up Japan adds its three votes to the tally. That still leaves them at 114—eight votes short of the 122 votes to ensure a majority, assuming none of the 242 upper house members fails to cast a valid vote for or against the bills. The idea, then, is to throw the bills back to the lower house, where the three parties have between them 318 seats (DPJ 307, PNP four, and SDP seven). Add the two members in the Hiranuma group there, and they have 320 votes, just enough to cross the 319-vote*** threshold for a supermajority. But can the DPJ afford to do that?
Remember how sparingly the LDP-Komeito coalition was in exercising its supermajority after it lost the upper house majority in the 2007 election. If anything, it would bend over backward to accommodate the DPJ on legislative bills, or even abandon them altogether for all but the barest necessities. It did this as a concession to media pressure in line with the perception that the LDP would not be able to regain its public mandate until it faced another lower house election. Likewise the post-7.11 DPJ. It must be looking beyond the two bills. And it must be aware that a supermajority override at the first opportunity after the Upper House election is an effective way of killing any immediate prospects of building a workable upper house coalition or, more likely, fluid issue-based alliances. Besides, there is no assurance that the SDP (and Hiranuma’s friends for that matter) will vote with the coalition on future override attempts (or for that matter that Kamei won’t continue to be the camel that refuses to be housebroken)
A lower house override on the postal “reform” bills will cause immediate and specific harm to the DPJ, since the mainstream media will oppose resubmission in their current form. The DPJ will in essence take a hit on the massive floating vote, with questionable political returns from the postal office electoral machine. It is useful here to remember that the DPJ originally wanted to reduce the Japan Post’s financial operations by half and sell off all of what remained in a public offering. It only reversed its position as part of a broader attempt to destroy the LDP altogether by taking away its special interest support. However, the election showed the waning influence of the postal office vote machine—PNP wipeout!—and, more broadly, special interest politics in general.
The workers dispatching bill should have a more mixed media response, and big labor, which now gives much of its support to the DPJ, supports it, so I expect it to fare better. However, with the SDP out of the coalition and in disarray, there is now a very good chance that the bill will revert to the original business-big labor compromise, rejecting the even tighter restrictions that the SDP and PNP forced on an unwilling DPJ. Here again, though, I can’t be sure that the DPJ is willing to pay the political price of an early lower house override, if it comes to that. Even if the Japan Communist Party pitches in with its six upper house seats, the alliance will still be a couple of seats short there—and that’s assuming that Stand Up Japan will not vote against it or abstain. I’m now leaning toward a scenario—there are other possibilities—where the DPJ will accept an amendment, possibly in the upper house, to secure passage without resorting to the lower house supermajority override.
Those are my immediate thoughts on the initial steps beyond the September election for the DPJ leadership. I still think that Kan will survive an Ozawa-inspired challenge, but his troubles then will only have begun.
* The PNP went in three upper house seats at stake and was wiped out, leaving it with the remaining three, which will be up for grabs in the next, 2013 election. The SDP ironically beat out PNP to keep two out of three, leaving it with four upper house seats, but could not stop the long, steady in voter support. The SDP could still implode, as Kiyomi Tujimoto, one of its few stars took her lower house seat and defected, touching off a blame game/power struggle among the remaining Diet member. Tsujimoto is likely to eventually caucus with the DPJ, vastly more instrumental than the SDP in her election.
** 108 seats if you exclude the upper house president, who by parliamentary custom is nominally an independent and normally withholds his vote. Likewise the vice president, who hails from the LDP, so the two cancel each other out.
*** This is not a typo. Two of the 480 lower house seats are currently vacant, so there are currently only 478 members there. Note that if the president and vice president of the lower house follow custom and abstain, there will be 466 votes. This would bring the supermajority threshold down to 318, in which case the Hiranuma group’s votes will be unnecessary. This may be consequential to the worker dispatching bill.
How Useful Is the Lower House Predominance on Budget Bills?
Not much, it turns out.
In the Japanese Diet, it takes a supermajority of two-thirds in the lower house to override an upper house rejection of a legislative bill. However, in the case of a budget bill, the decision of the lower house by a simple majority prevails if the two houses disagree. This is obviously designed to allow the business of government to continue in the case of a standoff. But it doesn’t quite work out like that in real life.
There are two categories of legislative bills submitted by the cabinet: budget-related and non-budget-related. Budget-related bills are bills that are necessary to execute parts of the budget*. Some of the budgetary links are tenuous and no doubt can be worked around with ease**. However, others are harder to do without. One major example is the plethora of business tax breaks, which collectively keep the effective corporate tax rate well below the nominal cumulative effect of the national and local corporate income taxes and other major business taxes. Must such tax breaks have relatively short time limits. Thus, they will disappear unless the Diet passes legislative bills that extend them or convert them into other forms***.
Now, some anti-businesses will say, good for them. But even unreconstructed socialists will balk at the thought of the government going bankrupt well before the end of the fiscal year. And that is exactly what will happen to the cash-strapped Japanese government unless the Diet passes the mother of all budget-related legislative bills.
Under the Public Finance Act, the government can only issue bonds to cover expenditures for public works, funding****, or lending. Therefore, each fiscal year since 1994, the Diet has passed a special dispensation bill that authorizes the government to issue deficit bonds to cover the projected revenue shortfall in the general account budget. In FY 2010, the shortfall is projected to be 44 trillion yen out of the projected revenue of 92 trillion yen*****. Things are unlikely to get any better in FY2011. Without a special dispensation act, my guess is that the government will literally run out of money by the end of calendar year 2011.
As a practical matter, the budgetary prerogative of the lower house is worth squat without a supermajority. In that sense, the Japanese national budget is no different from laws. Think about that when you consider the need, and prospects, for the Kan administration, or any other administration for that matter, for a meaningful coalition or, more likely, fluid issue-oriented alliances.
In the Japanese Diet, it takes a supermajority of two-thirds in the lower house to override an upper house rejection of a legislative bill. However, in the case of a budget bill, the decision of the lower house by a simple majority prevails if the two houses disagree. This is obviously designed to allow the business of government to continue in the case of a standoff. But it doesn’t quite work out like that in real life.
There are two categories of legislative bills submitted by the cabinet: budget-related and non-budget-related. Budget-related bills are bills that are necessary to execute parts of the budget*. Some of the budgetary links are tenuous and no doubt can be worked around with ease**. However, others are harder to do without. One major example is the plethora of business tax breaks, which collectively keep the effective corporate tax rate well below the nominal cumulative effect of the national and local corporate income taxes and other major business taxes. Must such tax breaks have relatively short time limits. Thus, they will disappear unless the Diet passes legislative bills that extend them or convert them into other forms***.
Now, some anti-businesses will say, good for them. But even unreconstructed socialists will balk at the thought of the government going bankrupt well before the end of the fiscal year. And that is exactly what will happen to the cash-strapped Japanese government unless the Diet passes the mother of all budget-related legislative bills.
Under the Public Finance Act, the government can only issue bonds to cover expenditures for public works, funding****, or lending. Therefore, each fiscal year since 1994, the Diet has passed a special dispensation bill that authorizes the government to issue deficit bonds to cover the projected revenue shortfall in the general account budget. In FY 2010, the shortfall is projected to be 44 trillion yen out of the projected revenue of 92 trillion yen*****. Things are unlikely to get any better in FY2011. Without a special dispensation act, my guess is that the government will literally run out of money by the end of calendar year 2011.
As a practical matter, the budgetary prerogative of the lower house is worth squat without a supermajority. In that sense, the Japanese national budget is no different from laws. Think about that when you consider the need, and prospects, for the Kan administration, or any other administration for that matter, for a meaningful coalition or, more likely, fluid issue-oriented alliances.
* Budget-related bills are submitted before the non-budget-related bills, so they have a much better chance of being passed before the Diet session expires. The Cabinet Legislative Bureau has final say within the bureaucracy on determining the nature of any bill. The distinction is sometimes unclear, and bureaucrats strive mightily to draft their bills to hook them up to the budget in ways that will convince the CLB to concur.
** Preferential lending rates from public financial institutions for specific policy objectives is the example that first comes to mind. Also, most subsidies other than tax breaks.
*** Most of the tax breaks are put together in a single law that covers special tax measures (including surcharges), and are dealt with en masse in an omnibus amendment bill during the annual regular Diet session.
**** Think, equity holdings.
***** The special dispensation acts are also used to dig up “buried treasures.” The FY2010 act, in addition to the authorization for deficit bonds, authorizes the transfer of funds from the FOREX, FILP, and Food Stabilization special accounts to the general account.
Wednesday, July 28, 2010
Incumbents a Problem for a DPJ-Komeito Coalition
There are so many scenarios in the immediate future of Japanese politics, but you have to start somewhere. Here are some base-case thoughts of mine on an important question concerning Komeito’s future.
Komeito, with its 19 upper house seats, is the only other than the LDP that can ensure an upper house majority by itself in a coalition with the DPJ (not to mention hat would then become a superfluous lower house majority). The policy inclinations of Komeito’s urban, increasingly middle-class Soka Gakkai constituency is relatively easy to accommodate within the DPJ’s policy agenda. So expect a lot of flirting and dancing to go on between the two; otherwise, government will grind to a stop*. But this does not mean that the two parties will be in a position to enter into a formal relationship in the near future.
To accommodate (my hypothetical) Komeito demands, the DPJ would have to force the incumbents (seven DPJ members and Yasuo Tanaka, the maverick New Party Nippon chief) to step down. It might be able to placate its own by putting them at the top of their respective regional tickets, but that would put its own regional district incumbents in peril. These are people who put successful careers on hold, or abandoned them altogether, to cast their lot with the DPJ; they will not go gently into that good night. My guess is that it will take at least another lower house election for the Komeito-LDP relationship to fully unwind—and the DPJ to take Komeito home—if the DPJ and LDP remain in their current configurations if not exact dimensions.
Komeito, with its 19 upper house seats, is the only other than the LDP that can ensure an upper house majority by itself in a coalition with the DPJ (not to mention hat would then become a superfluous lower house majority). The policy inclinations of Komeito’s urban, increasingly middle-class Soka Gakkai constituency is relatively easy to accommodate within the DPJ’s policy agenda. So expect a lot of flirting and dancing to go on between the two; otherwise, government will grind to a stop*. But this does not mean that the two parties will be in a position to enter into a formal relationship in the near future.
* Note that the DPJ can pass the budget by itself, but it won’t be able to account for half of it unless it can muster enough votes in the upper house (or a supermajority in the lower house to override its weaker counterpart) so that it can pass the authorization legislation for the multitrillion JGBs needed to cover the revenue shortfall.Komeito went into the 2009 lower house election with 31 seats and came out with only 21. The loss of all eight incumbents in single-member districts to DPJ or DPJ-supported candidates was particularly keenly felt, since it wiped out the Komeito lower house leadership; not one of the incumbents had been placed on the corresponding regional district list as insurance against a loss in the single-member election. Getting those seats back will the most important part of the asking price—there’s also the upper house and local elections and, yes, policy issues—for a formal coalition.
To accommodate (my hypothetical) Komeito demands, the DPJ would have to force the incumbents (seven DPJ members and Yasuo Tanaka, the maverick New Party Nippon chief) to step down. It might be able to placate its own by putting them at the top of their respective regional tickets, but that would put its own regional district incumbents in peril. These are people who put successful careers on hold, or abandoned them altogether, to cast their lot with the DPJ; they will not go gently into that good night. My guess is that it will take at least another lower house election for the Komeito-LDP relationship to fully unwind—and the DPJ to take Komeito home—if the DPJ and LDP remain in their current configurations if not exact dimensions.
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