Hatoyama delivers an impressive cabinet

The votes are being counted in the House of Representatives, after which the House of Councillors will vote for the new prime minister. Hatoyama Yukio's election as the next prime minister is assured.

On the eve of his election by the Diet, Hatoyama decided the presumptive lineup of his cabinet — but he did not share it with the press Tuesday, warning that if appointments "are leaked, they will be changed." (Hatoyama actually deserves credit for his handling of the press regarding cabinet appointments during the past two weeks: he said he would hold off on making announcements, and he has stuck to it, offering little to the press when questioned. Undoubtedly he has made few friends among the media as a result.)

But the list itself, now public, is impressive. In addition to already-known appointments of Kan Naoto (deputy prime minister and head of the national strategy bureau), Okada Katsuya (foreign minister), Fujii Hirohisa (finance minister), and Hirano Hirofumi (chief cabinet secretary), the Hatoyama cabinet includes as host of senior DPJ politicians balanced among the party's different groups. The balance led Yomiuri to refer to it as a "safe driving" cabinet, as if safe driving is a bad thing after Aso Taro's reckless driving (how else to refer to his appointment of Nakagawa Shoichi as finance minister during a severe global financial crisis, after all?). Appointing ministers from across the party is a good way of ensuring that there will be lively debates in the cabinet and that there will be few senior politicians left in the party to cause trouble for Ozawa Ichiro and the cabinet. (Noda Yoshihiko, an "anti-mainstream" leader, was denied a cabinet post and has reportedly complained about it, but he has relatively little company.)

In addition to the aforementioned names, the cabinet will tentatively include the following:

Haraguchi Kazuhiro, a five-term member from Saga prefecture, will serve as minister of internal affairs and communications. Haraguchi is exceptional in that he actually held the same portfolio in the DPJ's shadow cabinet. In fact, he has held the postal reform portfolio in previous shadow cabinets, suggesting not inconsiderable familiarity with his brief. At fifty years old, he will be the third youngest member of the cabinet.

The justice minister will be Chiba Keiko, an upper-house member from Kanagawa who is unusual in that she is one of a tiny number of DPJ members who did not leave the Social Democratic Party of Japan (SDPJ) until well after the party's ill-fated coalition with the LDP. Chiba is liberal on history and social issues, and has served as the shadow justice minister and the shadow minister for gender equality and human rights under various party leaders (including Maehara).

Kawabata Tatsuo, one of the party's vice presidents and an eight-term Diet member (first elected from the Democratic Socialist Party), will take the lengthy title of minister of education, culture, sports, science, and technology. Befitting his long service, Kawabata has held a number of party leadership positions, including chairman of the party's board of governors.

In a somewhat surprising move, Nagatsuma Akira, "Mister Nenkin," scourge of the Social Insurance Agency, will be Masuzoe Yoichi's successor as minister of health, labor, and welfare. At forty-nine he will be the second-youngest cabinet member. I think giving Nagatsuma a proper ministry is a brilliant stroke, ensuring that a problematic ministry will get an energetic minister strongly committed to the party's administrative reform program (and reforming social security) at its head, and giving Nagatsuma experience that will raise his national profile further. His popularity will no doubt be a boost for the cabinet.

The ministry of agriculture, forestry, and fisheries — perhaps the most problematic ministry — will go to Akamatsu Hirotaka, a seven-term Diet member who began his career in the Socialist Party and has been in the DPJ since its first iteration. He will have his work cut out for him.

Naoshima Masayuki and Maehara Seiji (at forty-seven the youngest cabinet member) received the economy, trade, and industry, and land, infrastructure, transport, and tourism portfolios respectively. Maehara will also hold portfolios for disaster relief, and Okinawan and Northern Territories affairs. (Perhaps the latter briefs are a way to give Maehara a voice in foreign policy discussions through the back door? Presumably any cabinet committee discussion of either issue will include Maehara.)

The environment ministry goes to Ozawa Sakihito, along with Hirano Hirofumi a close ally of Hatoyama's. A member of Sakigake and an original member of the DPJ, Ozawa's appointment may reflect the prime minister's interest in emissions controls.

After worries that the defense ministry would go to the PNP's Kamei Shizuka, the post will go to Kitazawa Toshimi, along with Maehara and Kawabata a party vice president. Kitazawa is also one of four upper house members in the cabinet. Coming from Nagano, it is not surprising that Kitazawa has long been close to former Prime Minister Hata Tsutomu, once Ozawa's co-conspirator in splitting from the LDP in 1993 and one of the participants in the creation of the new DPJ in 1998. He recently served as chair of the upper house foreign and defense policy committee.

Nakai Hitoshi, who first joined the DPJ in 2003 in the merger with the Liberal Party, will serve as head of the Public Safety Commission, and Ozawa critic Sengoku Yoshito will head the new Administrative Renovation council.

Also joining the cabinet will be SDPJ head Fukushima Mizuho, whose portfolio will include consumer affairs and the aging society problem, and PNP head Kamei Shizuka, whose portfolio will include the Financial Services Agency (FSA) and the postal issue. Kamei is pleased to have received this post, describing the appointment as "perfect." It is not clear, however, what role Kamei will play in dealing with Japan Post, as the ministry of internal affairs will continue to take the lead in managing postal affairs. The portfolio may simply assure Kamei a seat at the table without any attendant administrative responsibilities. Mainichi reports some unease from investors regarding Kamei's position as head of the FSA due to his opposition to "structural reform," although Kamei will likely have little independence regarding finance and investment. (And, incidentally, it was Kamei who reassured the Obama administration that Nakagawa Masaharu's remarks about Japan's buying only Samurai bonds under the DPJ was not an official statement.)

Ikeda Nobuo sees Kamei's participation in the cabinet as an ill omen for the Hatoyama government, citing shady dealings of Kamei's from the 1980s. I cannot speak to these rumors, but Ikeda makes one claim regarding Kamei's participation in the cabinet that I disagree with: Ikeda argues that Hatoyama will have a difficult time controlling Kamei and suggests that he could become a "bomb that destroys Japan's economy." I think that both Kamei and Fukushima will end up being marginal figures in the new government. Neither has an important portfolio, and with the DPJ aiming to move away from unanimous decision making in the cabinet, they will have little power to stop cabinet decisions. Their parties obviously have the ability to stop legislation in the upper house, but if they are included in the decision-making process from the beginning it should simplify management of the upper house. As MTC argues, the DPJ may need the two small parties beyond July 2010, and it makes good sense to include both leaders in the cabinet to streamline the policymaking process. Undoubtedly Kamei and Fukushima are simply happy to be in the cabinet. The DPJ has given up very little to secure their participation. I think worries about the two are, for now, overblown.

I think that Hatoyama did an extraordinary job picking his cabinet, for which he deserves credit. He has shown that he has no problem delegating authority to politicians who may have more policy expertise than him or independent standing within the DPJ. Few politicians in the cabinet are dependent on Hatoyama for his patronage. He will be surrounded by ministers who will have no problem disagreeing with the prime minister. But he also chosen talented ministers who by and large have been in the DPJ for most if not all of its existence, are committed to its policy programs (especially administrative reform), and are independent from Ozawa Ichiro. As I told Yuka Hayashi of the Wall Street Journal, Hatoyama as prime minister will be "more of a committee chairman than a president." He will have to manage debates among his ministers, intervening when appropriate, closing debates, and setting the policy agenda. But he will not be in a position to dictate policies to his cabinet and demand that the ministers follow along.

When it comes to cabinet personnel, Hatoyama has put his government in a position to succeed.

The Hatoyama system takes shape

The coalition with the SDPJ and the PNP cemented, the DPJ is getting to work filling in the rest of the cabinet.

One question is what posts the SDPJ's Fukushima Mizuho and PNP's Kamei Shizuka will fill. The SDPJ has requested either the ministry of health, labor, and welfare or, it seems, the environment portfolio. Despite an earlier report that suggested Kamei would enter the cabinet as a minister without portfolio, it seems that the PNP now wants the ministry of internal affairs and communications, not surprisingly given that the PNP's issue is reversing postal privatization. It is unlikely that the DPJ will give the post to Kamei.

Hatoyama Yukio has set 15 September, the day before the Diet will elect the new prime minister, as the target for finalizing cabinet appointments. Nothing, it seems, will be decided before then.

But the names of likely cabinet ministers are emerging. In addition to Fukushima and Kamei — and before them Okada Katsuya, Hirano Hirofumi, Fujii Hirohisa, and Kan Naoto — DPJ members under consideration are Nagatsuma Akira ("Mr. Nenkin"), Maehara Seiji, Sengoku Yoshito, and Naoshima Masayuki. Maehara, despite (or because of) his reputation as a hawkish defense specialist, is rumored to be under consideration for the ministry of land, infrastructure, transport, and tourism. Sengoku is being considered for the justice and health, labor, and welfare, while Naoshima, currently the DPJ's policy affairs research council chairman, may end up as the METI minister.

That leaves at least seven more names to be included in the new cabinet, which could be more depending on how many "special mission" posts the Hatoyama cabinet decides to create.

What seems clear, however, is that with Maehara and Sengoku likely to receive important posts in the cabinet, it will be difficult to speak of the Hatoyama cabinet as an "Ohato" cabinet. It is possible that Ozawa's favorites could fill out the remainder of the cabinet, but with Sengoku and Maehara — Sengoku was close to running against Ozawa last year, and both were against Ozawa's continuing as party leader as the Nishimatsu scandal unfolded — in the cabinet, the idea that Hatoyama's cabinet will simply be under Ozawa's thumb is unlikely.

Indeed, it is possible that the DPJ has solved its Ozawa dilemma. Ozawa will still wield tremendous power, but his power will be more directed at the party's now numerous backbenchers. He could use those backbenchers against the cabinet, but that assumes that their loyalty to Ozawa is so strong as to lead them to rebel against their party's leadership in cabinet. I will believe in the existence of an Ozawa faction when I see some evidence for it beyond speculation rooted in Ozawa's past as a lieutenant of Tanaka Kakuei linked to his work on behalf of DPJ candidates across Japan.

Walter Bagehot provides an appropriate metaphor for thinking about Ozawa's role in the new government: "A cabinet is a combining committee, — a hyphen which joins, a buckle which fastens, the legislative part of the state to the executive part of the state. In its origin it belongs to the one, in its functions it belongs to the other." In the case of the Hatoyama government, Ozawa will be the hyphen that joins the DPJ-led cabinet to the DPJ's parliamentary majority. His voice will carry weight — I have a hard time seeing him stay completely quiet on policy affairs — but his influence on policymaking may be less than feared.

Indeed, in this role Ozawa could be indispensable to moving Japan away from LDP's cumbersome policymaking process into an era in which politicians in cabinet are capable of making decisions, enacting policies, and leading. Ozawa has long lamented the role that bureaucrats (and the United States) have played in limiting the ability of Japan's political leaders to direct the country. The question now is whether Ozawa can accept other political leaders' directing the country. With enough Ozawa skeptics in the cabinet, he may have no choice but to accept their lead.

The DPJ begins work on regime change

In a remarkable coincidence, the day after the DPJ's victory in the general election — and the day the DPJ began its transition in earnest — was the same day that ministries and agencies submitted their spending requests to the ministry of finance for the Fiscal 2010 general account budget.

The requests totaled roughly 92.13 trillion yen, a 3.58 trillion yen increase over the 2009 general account budget, making it the first over 90 trillion yen. Of the total, 52.67 trillion yen are general expenditures, with most of the remainder going to servicing Japan's national debt and regional subsidies.

Tango Yasutake, the finance ministry's administrative vice minister, stressed the ministry's desire to complete the budget within the calendar year, as is customary. The reason for Tango's emphasizing the ministry's desire is of course because the DPJ, still a few weeks from taking power, wants to halt the process immediately due to its desire to rearrange the budget completely, for the sake of introducing political leadership into the budgeting process and ensuring that programs from the DPJ's manifesto are included in a DPJ government's first budget as per the timeline included in the manifesto.

DPJ leader Hatoyama Yukio has stressed that the DPJ wants to change the budget completely, as the budget does not reflect its desires whatsoever. Apparently Kawamura Takeo, the outgoing chief cabinet secretary, did not get the message sent by the Japanese people on Sunday: Kawamura said Tuesday that because the requests include measures related to economic stimulus, the DPJ should give serious consideration to the requests as they stand. His colleagues also seemed to miss the point of Sunday's election. Ishiba Shigeru, the outgoing agriculture minister, and Kaneko Kazuyoshi, the outgoing transport minister, used the occasion of the post-election cabinet meeting Tuesday to criticize DPJ programs and demand that the DPJ leave programs untouched.

This is the first battle in the DPJ's fight to change how Japan is governed, and it should win: Asahi reports that the finance ministry is trying to exclude obligatory organizational expenses from the DPJ's desire to reshape the budget in its image. Presumably that leaves plenty of room for the DPJ to fix the budget as it desires. In this fight, the timing of the election may have been fortuitous. The bureaucracy is now facing the DPJ fresh from the high of its historic victory, with possibilities for the new ruling party that presumably won't exist once the DPJ moves into government and gets bogged down in governing.

But at the same time, the process would go smoother if the DPJ were to assemble its cabinet lineup sooner rather than later. Despite earlier indications that a victorious DPJ would name the appointees for senior cabinet posts within the first week after a general election — as indicated in the transition plan which according to Asahi is more associated with Okada Katsuya than Hatoyama — Hatoyama said Monday that he would not name a handful of senior appointees before naming the entire cabinet. The whole cabinet will be named after Hatoyama is elected prime minister. It also seems that Hatoyama may be wavering on his desire to appoint only elected officials to leading cabinet posts as he realizes how inexperienced his own party's members are. I strongly disagree with the decision to delay filling the most senior positions early. The transition would presumably go more smoothly with the government's core in place immediately, with the ministers-in-waiting getting their own teams in place and beginning to meet with senior bureaucrats in the ministries. The transition period is critical for the Hatoyama government's proposed national strategy office, which will have a major role to play despite not existing yet. After all, the NSO will be responsible for remaking the budget along lines desired by the DPJ — a point reinforced by Hatoyama's comment that the posts of NSO chief and the finance minister will be stressed jointly. To smooth the transition, the NSO in particular ought to be staffed as soon as possible.

Meanwhile, the press continues to report that Fujii Hirohisa will have a central role in the new government and that he will likely be joined by Kan, Okada, and Naoshima Masayuki, currently the DPJ's policy chief. Again, why wait if it is increasingly clear who will be occupying the leading posts? Filling these positions now would also take a bit of pressure off of Hatoyama — and would help move from abstract, campaign-style pronouncements as in Hatoyama's press conference Monday.

The bureaucracy itself is making its preparations for its new political masters. Bureaucrats have already delivered copies of budget requests to the offices of DPJ incumbents. For the first time, Yomiuri reports, DPJ members' offices are being visited by bureaucrats, in droves, whether or not the Diet members are present. Meishi are being left in mailboxes by bureau chiefs and other officials at levels never encountered by many DPJ members.

But the battle lines are also being drawn. As I argued in my earlier post on the importance of budgeting for the DPJ (previously linked to in this post), the DPJ's battle for budgetary authority will be waged more with spending ministries than with the finance ministry. Chief among them will be the ministry of land, infrastructure, transport and tourism (MLITT — haven't since this acronym, but why not?) and the ministry of agriculture, forestry, and fisheries (MAFF), the ministries with the most to lose from the DPJ's economy drive. Naturally MLITT's budget request was just about at the budgetary ceiling set by the CEFP. It appears that while MLITT has suggested that it might be open to revising its request, the ministry and the DPJ could clash over the construction of Yanba dam in Gunma prefecture and Kawabegawa Dam in Kumamoto — the DPJ called for the cancellation of both projects in its manifesto, meaning that the DPJ will fight that much harder to ensure that they are expunged from the budget. The DPJ's goal is cut 1.3 trillion yen in public works over four years (which, incidentally, shows how much Japan has already cut public works).

MAFF's request, meanwhile, was a 15% increase over last year's budget, an increase that includes a 19% increase in the ministry's public works spending.

MLITT, having shown conciliatory signs to the DPJ and having become accustomed to shrinking budgets, may find a way to accommodate itself to the new regime. Taniguchi Hiroaki, its administrative vice minister, requested a meeting with Hatoyama, a bit later than his colleagues in the leading ministries but still encouraging. Indeed, the ministry has announced that from 11 September it will freeze bidding on the Yanba dam, at least temporarily. The ministry still intends to argue for the dam, for which funds have already been dispersed to neighboring prefectures, but the DPJ probably has the upper hand.

The big fight will be with MAFF, which is truly threatened by the DPJ's income support plan and whose adminstrative vice minister has already traded words with the DPJ.

The DPJ could not have asked for a better start to its rule than to have bureaucrats dispirited and conscious of the fact that for now opposing the DPJ means opposing a public already ill-disposed to the bureaucracy, a public that whatever its doubts about the DPJ's manifesto is perhaps most sympathetic to the idea of political rule. It may be the case that neither side wants a fight for now, the DPJ because to wage open war on the bureaucracy would hinder its ability to get anything done, bureaucrats because for the moment a fight with the DPJ is a fight that they are sure to lose in the court of public opinion.

For more on the possibilities of genuine administrative reform, I recommend this essay by Karel van Wolferen, who is aware of the obstacles facing the DPJ without dismissing the possibility that the DPJ will succeed. I particularly like this sentence: "But my impression is that the individuals of the inner core of the party are deadly serious about what must be done to turn their country into what one of them, the most senior and most experienced Ozawa Ichiro, has in his writing called a 'normal country'."

Exactly so. The DPJ means what it said during the campaign, and is taking the first steps towards a new system of governance.

Anticipated reactions

The ministry of finance, its ears filled with the ringing of revolution (or at least administrative reform), appears to be engaging in a classic case of anticipated reaction to the prospect of a DPJ government or an LDP government that could take its promise of "cutting waste" seriously. Accordingly, it has instructed requesting ministries to identify wasteful funding in their budget requests due at month's end. The finance ministry is particularly focused on inefficient public works projects.

The finance ministry is clearly trying to concede some ground to a possible DPJ government in the hopes that doing so will forestall a more forceful attempt by the DPJ to seize budgetary authority, at least in the short term. The anticipated reaction may well fail. On NHK Sunday Naoshima Masayuki, the DPJ's policy chief, said that if the DPJ takes power it will completely review the budget requests for fiscal year 2010, although he also said that the party wants to complete the budget within the calendar year, which might be difficult given that the party does not know whether it would have its preferred organization for drafting the budget — the national strategy office attached to the prime minister's office — ready in time to oversee a review of budgetary requests. But the DPJ has made no secret of its desire to restore the cabinet's constitutionally granted power to draft the budget to the elected representatives serving in the cabinet. Hatoyama Yukio made the DPJ's intentions clear to Tango Yasutake, the newly appointed administrative vice minister of finance, in a discussion in July. Tango had some praise for the party's plan for a national strategy office, but overall his reaction was perhaps a bit muted. Tango may well prove amenable to the party's plans: his service as a secretary to former Prime Minister Koizumi Junichiro may make him more amenable to the idea of "political control."

But this is just the first phase in what could ultimately be the defining battle of a DPJ government should the party win this month. The DPJ will presumably not be satisfied with waste cut voluntarily by the ministries, but the finance ministry loses little by trying to anticipate the DPJ's goals now, and by doing may ensure that this year's budget process goes smoothly despite a possible change of government. But if the DPJ is serious about overhauling the budget-making process so that politicians are responsible not just for determining the overall shape of the budget, but in micro-budgeting, determining which programs belong in the budget and how much public money they deserve, there will be a major struggle between the DPJ and the finance ministry, provided a potential DPJ government survives more than one budget cycle.