Departures

Watanabe Yoshimi is on his own.

As Jun Okumura makes exceedingly clear, there is little chance that Mr. Watanabe will be joined by other LDP defectors in his effort to build a national movement to take down the old guard. (Although, surprisingly, Mr. Watanabe was joined by an LDP abstainer — Matsunami Kenta — in Tuesday's vote on the second stimulus, an act of rebellion for which Mr. Matsunami has already been punished by being stripped of his title as parliamentary secretary for the Cabinet Office.) Mr. Watanabe has indicated that he wants to build a "popular movement," not a new party.

The basis for this popular movement is anger at the bureaucratic conservatism that Mr. Watanabe believes lies at the heart of the "old, old LDP." For Mr. Watanabe, bureaucratic rule — to which the LDP is wedded — lies at the heart of the country's inability to cope with the once-in-a-century crisis facing Japan.

In a recent issue of Voice he wrote of the shift to a "postmodern" moment, arguing that Japan is in the midst of one of several great transformations, in the mold of the transitions to the Heian, Kamakura, and Edo periods. Arguing that a "once-a-century storm" requires a "once-a-century response," Mr. Watanabe advocates the wholesale transformation of the Japanese state, starting with administrative reform and the eradiction of amakudari. He further advocates decentralization and the consolidation of prefectures into states as a means of depriving Kasumigaseki of power — and with the reorganization of local governance, he suggests that the capital should be moved, as in earlier great transformations. (This is hardly a new idea.)

He offered an expedited version of this article in both his statement of secession and his Tuesday press conference.

The LDP may yet offer further confirmation of Mr. Watanabe's argument that the LDP is incapable of implementing the reforms Mr. Watanabe believes necessary to save Japan from ruin. As Uesugi Takashi argues in the February issue of Voice, the LDP may once again fight over the future of the road construction fund during the ordinary Diet session. For Mr. Uesugi, the road construction debate lies at the heart of the LDP's downfall. The road construction tribe has persistently blocked efforts not only to shift funds from road construction to other, less particularistic ends, it has blocked reform more generally. Surely behind obstruction to Mr. Watanabe's efforts to promote administrative reform lies the hand of the road tribe, for any serious attempt to uproot amakudari would be a blow to the construction companies, the bureaucrats responsible for the contracts, and road tribe members themselves. Aso Taro may become only the latest in a series of LDP prime ministers forced to back down in the face of resistance from the road tribe. Naturally while the media and the public busy themselves with the possibility of rebellion by reformists when the 2009 budget comes to a vote, the road tribe will be quietly looking for ways to water down Mr. Aso's promise to suspend the special fund and redirect the newly created "fund for the creation of a foundation of rural vitality" towards road construction funding.

Of course, it does not do to simply demonize the LDP's longtime reliance on public works spending (which some Americans have begun to do in anticipation of the Obama administration's stimulus plan). The LDP came to rely on public works as what Margarita Estévez-Abe has called a "functional equivalent" of welfare and unemployment assistance, a method of public support that also produced public goods for rural areas while conveniently solidifying the LDP's political position in rural electoral districts. As Estévez-Abe argues, the LDP essentially farmed out welfare provision to small companies, enabling Japan to create a welfare state without a large public sector or an unsustainable public debt for much of the postwar period:

Instead of aiding firms to shed their redundant workforce, the Japanese welfare state subsidized employment of excess labor — in both large and small firms. Rather than creating a large public sector — which would have benefited the opposition parties — or an extensive active labor market to pool and train redundant workers, Japan subsidized private sector employment instead. Japan's 'socialization' of capital was a crucial piece that made the system work. It allowed the state to invest in public works beyond its tax revenue. It also permitted private firms to function as primary welfare providers by shielding them from financial pressures. In short, Japan's small social welfare spending and its weak organized labor did not yield a form of laissez-faire capitalism. On the contrary, postwar Japan pursued a brand of capitalism, where economic units — that is, firms — were very much treated as units of welfare provision as if under a socialist regime. Furthermore, state intervention to protect businesses in Japan perpetuated the presence of a large number of inefficient firms. (Welfare and Capitalism in Postwar Japan, 198.)

The problem therefore is not that the road tribe is the mastermind behind a sinister conspiracy to wreck Japan. It's that this form of social protection — targeted at both firms and individuals located in rural Japan — is antiquated, and that continued efforts to perpetuate this system delay the construction of a more conventional welfare state and make life worse for the Japanese people.

The "redundant" worker who might at one point have worked in small construction company somewhere far from Tokyo is now a temporary worker struggling to find work in urban Japan and living without benefits. The Japanese state, having broken the bank in the 1990s, is no longer able to protect the small firms and their host communities with public works. Little wonder that Japanese firms, deprived of government support, are failing in the face of the global financial crisis. Bit by bit the old system is crumbling, but efforts to prolong its life have unfortunately made it difficult for the government to build a new system in its place.

But the road tribe, their local politician allies, the construction companies, the bureaucrats: they have all been doing what they can to preserve a system that played an important social role for decades. They might be acting out of self-interest, but it is hard to expect them to do otherwise. The time has come, however, for a new system that ensures that public funds are directed to those most in need of it, that public funds are used to create a new safety net that ensures that failing to secure a permanent position in a major corporation is not a sentence to a lifetime of penury and economic insecurity. Japan is in urban country — it needs to a universalistic system that reflects its demographics. Creating a universalistic system should not mean tossing rural areas on the rubbish heap, but Japan must discard a welfare system that now provides support to an increasingly narrow segment of the population.

The LDP, torn between advocates of a new system and defenders of the old, has been singularly incapable of doing what must be done to develop both new sources of wealth and new means of protecting the public. It is for this reason that Mr. Watanabe left, and why Mr. Watanabe is right to argue that questions of public welfare are inseparable from the question of administrative reform. Defenders of the old system, unwilling to surrender voluntarily, must be defeated if a new system is to be created. Of course, it is for this reason why the LDP must be defeated in the 2009 general election.

Bait and switch

The HR passed the road construction bill a second time on Tuesday afternoon, as scheduled. Despite rumors to the contrary, there was no rebellion. Kono Taro and his comrades voted with the government, in the process illustrating why the much-anticipated political realignment has yet to occur: for all the discontent voiced by backbenchers about the leadership of both the LDP and the DPJ, they remain reluctant to bear the risks associated with bucking the party leadership and possibly leaving the party.

Mr. Kono and other reformists are still threatening to fight for the party to adopt the prime minister's plan to phase out the road construction fund from 2009, but after caving on the road construction plan Tuesday, will their concerns be taken seriously in the coming months? As Mainichi reports, despite remaining silent in the face of the cabinet decision supporting Mr. Fukuda's plan, the road tribe remains ready to fight to preserve its privileges. The road tribesmen will instead focus their efforts on the year-end budget proposal, a sound strategy considering that Mr. Fukuda will likely be gone by then, leaving the reformists to fight on alone.

Even with Mr. Fukuda as premier the tribesmen have important allies within the party for their campaign to derail the reform: local and prefectural politicians, who will undoubtedly remind their patrons in Tokyo that their communities need the road fund and suggest that if Mr. Fukuda's plan goes forward, they cannot guarantee that the LDP will get favorable returns in the next general election. Whether such a threat is credible is not the issue — if the LDP leadership becomes convinced that ending the special fund truly alienates the party from its supposed base, that will be enough to ensure that the reform plan gets watered down to the point of irrelevance. The head of the national mayors association has already criticized the plan, no doubt the first of many such comments to come from local politicians.

In short, the LDP, already concerned that its rural base could desert the party in a general election, will not follow through on Mr. Fukuda's proposal, a classic bait and switch.

And so the LDP's death throes will continue, as the LDP can no longer rely on the two methods that had extended its life in the past: opportunistic policy shifts (like this, for example) and "divide-and-rule." (These arguments are made by Ito Atsuo in a Chuo Koron article to which I linked above.) Regarding the former, not only has the LDP calcified ideologically, but its reformist members, who want to change the party's policies, find it nearly impossible to overcome the opposition of older members who desperately cling to their remaining privileges. What do the latter have to lose in resisting reform tooth-and-nail? The party is in no position to punish them, Mr. Koizumi's 2005 purge notwithstanding. Mr. Koizumi's purge of postal rebels — so objectionable to many LDP members, judging by the return of most of the rebels to the LDP — was clearly an aberration.

As for the latter, the LDP's bid to divide and co-opt the opposition by offering a grand coalition to the DPJ clearly failed and if anything united the DPJ in its opposition to the government. This scheme may have temporarily created turmoil within the DPJ by intensifying dissatisfaction with Ozawa Ichiro's leadership, but Mr. Ozawa appears to have quelled most of the resistance to his leadership. The LDP continues to hope that Mr. Ozawa will face a serious challenge in the September party leadership election but the threat to Mr. Ozawa may be overstated. A reformist like Maehara Seiji or Okada Katsuya, both former party leaders, may ultimately stand against Mr. Ozawa, but it is unlikely that the bulk of the party will abandon Mr. Ozawa for either man.

Meanwhile, the depth of the LDP's desperation is revealed in its hope for an incapacitated DPJ.

The second override

The House of Councillors voted yesterday to reject the ten-year road construction plan passed by the House of Representatives in March. The bill was defeated 108 to 126, with DPJ (proportional representation) members Oe Yasuhiro and Watanabe Hideo rebelling against the party leadership to support the bill, and Kimata Yoshitake (Aichi) and Hironaka Wakako (Chiba) abstaining from the vote. The PNP's four members, who caucus with the DPJ, also abstained from the vote.

The Fukuda government plans to bring the bill to a second vote in the HR Tuesday afternoon.

Tuesday morning the government plans to secure a cabinet decision on Mr. Fukuda's plan to phase out the special road construction fund, a precondition for forestalling a rebellion by Kono Taro and his band of reformists. The path to a cabinet decision has been tortuous, as reported by Mainichi. Until the LDP's defeat in the Yamaguchi-2 by-election, the government's policy was to wait until after passing the road construction plan a second time before securing a cabinet decision on the Fukuda plan. Taking the threat of rebellion seriously, the government has changed tacked, and, consistent with the Fukuda government's poor sense of timing, has put off securing a cabinet decision until Tuesday.

Presumably that will ensure that Mr. Kono and his comrades will vote with the government in the afternoon. Yamamoto Ichita anticipates that not even one will defect. He argues, however, that the real battle is yet to come. A cabinet decision is not enough; the reformists will have to fight within the LDP to ensure that the party embraces the prime minister's plan.

Assuming that the road construction plan passes Tuesday afternoon, an extra ten years of road construction funded by the special road construction fund will be law — and Mr. Fukuda's plan still just words.

The LDP's dilemmas

Yamamoto Ichita, taking a break from rocking out, writes of the divide between LDP veterans and youngsters in the debate over Prime Minister Fukuda's plan to shift the special road construction fund into the general fund from 2009.

The question is how the prime minister should proceed. At present, the HR will be voting next week to override the HC and pass the road construction plan in its current form, even as the prime minister has promised a new plan. Mr. Yamamoto himself sees no inconsistency in passing the existing plan and then revising after the fact; he recognizes, however, that the public doesn't see it this way. Mr. Yamamoto and other potential rebels want official decisions by the cabinet and the LDP executive in support of Mr. Fukuda's plan. Party veterans, according to Mr. Yamamoto, fear that giving Mr. Fukuda's plan official imprimatur also means giving opponents the opportunity to sabotage the plan. Mr. Yamamoto chalks up the dispute to differing perceptions of election timing.

Is it really as simple as that? This seems to be another example of the cautious/risk-taking divide within the LDP in the face of conservative reaction (in this case in the form of the road tribe resistance to reform). For the "veterans" — Mr. Yamamoto's word — a direct, open schism in the LDP as a result of fights in the party council and the cabinet is a greater concern than the possible electoral consequences of going forward solely on the basis of the prime minister's promise. The young reformists want official decisions, even if it means open confrontation with the opponents of road construction reform and a greater risk of failure. As before — see the case from 2005 when the LDP council forced revisions to the postal reform bills on Mr. Koizumi by virtue of an unprecedented majority (as opposed to unanimous) vote — the veterans are willing to violate procedures and customs if doing so minimizes the risks to the party (as they see it).

Without official decisions, Mr. Fukuda's strategy on his compromise plan amounts to telling the people, "Trust me." It entails back-loading LDP resistance to the plan, in the hope that somehow the resistance will be placated over time. The reformists' approach entails front-loading resistance, tackling it head on, at the beginning. Even if Mr. Fukuda's plan gets derailed while in deliberation, at least the "opposition forces" will be out in the open, enabling the prime minister to draw a firm line on reform, à la Koizumi, and possibly revive his crumbling cabinet.

And even that probably won't be enough to save Mr. Fukuda, given that the DPJ's obvious retort is if it can be done from 2009, why not from 2008?

Regardless, the party's dilemma remains. Tahara Soichiro points out in Liberal Time that although there is probably a majority within the LDP in favor of ousting Mr. Fukuda, but is deterred from pushing for his replacement for fear that the formation of a new government will prompt irresistible calls for a general election. No one in the LDP is ready to risk that, given that it could be a massacre for LDP and Komeito candidates.

But how long will Mr. Fukuda be protected by fears of a general election?

I still suspect that he has until July, after which the party will take its chances on a new leader — and perhaps even resign itself to a general election that I expect will trigger the realignment once the general election produces a nearly split HR. In short, Mr. Fukuda will most likely not have the opportunity to see his road construction plan through to fruition.

The LDP and DPJ talk past each other

A six-party conference of government and opposition parties met Friday to negotiate a compromise on the future of the special fund for road construction. Debate will begin in earnest on Wednesday, a week before the governing coalition is expected to use its HR supermajority to reimpose the temporary gasoline tax.

According to Mainichi, at the initial meeting Tanigaki Sadakazu, chairman of the LDP PARC, called for a review of the parties' positions on a broad spectrum of issues, including the absorption of the road construction fund into the general fund and the temporary tax, subsidies to local governments and the state of local government finances, road construction plans, and the reform of related public corporations. Yamaoka Kenji, the chair of the DPJ's Diet strategy commitee, objected, arguing that the conference should focus on the matter immediately at hand: the road construction fund and the temporary tax.

This dispute is revealing about the nature of the conference. The purpose of this conference is not to forge a compromise amenable to all parties. The purpose of this conference is to provide the LDP, and to a lesser extent the DPJ, political cover. The LDP needs to appear conciliatory before the HR votes again first on the temporary tax at the end of April and the road construction bill two weeks later, so as to undermine the inevitable argument that it is acting heavy-handed in overruling the HC. So why not call a compromise conference that has a broad remit, a remit so broad and a timeline so brief as to ensure that no agreement will be forthcoming? I find it hard to believe, as the LDP leadership argues, that it is the DPJ alone that is playing politics with important national issues.

For its part, the DPJ isn't interested in compromise at the moment. Why should it be? It has painted the Fukuda government into a corner by opposing the temporary tax, forcing the government to take the potentially unpopular step of reimposing the tax. It has used road construction plans as a wedge issue, forcing the LDP's reformists to fight with the zoku giin over the future of road construction, with Mr. Fukuda caught in the crossfire. Accordingly, the DPJ is divided less over whether to compromise than over the party's response to the increasingly inevitable HR re-vote on the tax and road construction bills. That decision may now rest solely in Mr. Ozawa's hands as the DPJ's HC caucus has announced that it will respect party policy.

Going into the conference, it is the LDP that has yet to figure out what it stands for in this debate. The official stance, of course, is Mr. Fukuda's plan to move road construction funds into the general fund from FY2009 while renewing the temporary gasoline tax and possibly re-envisioning the tax as a "green tax." But as Sankei points out, there is considerable (and open) discontent with Mr. Fukuda's approach on all sides of the LDP. Some fear the electoral consequences of restoring the temporary tax. The zoku giin oppose a compromise, and hope that the HR will re-pass the same road construction bill in May that it passed in March, instead of considering a new compromise bill. The reformists want a compromise bill and are supposedly ready to vote against the prevailing bill. And the party's cautious elders — perhaps we should call them the 慎重派 (the shincho-ha, the cautious faction) — are, as always, cautious.

The LDP's internal discontent shows no signs of abating. Ishihara Nobuteru, a potential reformist contender for the LDP's leadership in the future, gave a speech in Fukuoka Friday that described Mr. Fukuda's compromise plan to move road funds to the general from 2009 as "clearly inconsistent." On the other side of the debate, Mr. Tanigaki argued in Hokkaido that neither bill should be revised: the temporary tax should be reimposed and gasoline tax revenue should continue to go to road construction, otherwise the finances of local governments will suffer and public works projects will not be completed. (Mr. Tanigaki's hardline position is interesting considering that he is involved in the compromise conference discussed above.)

It remains unclear whether internal discontent will manifest itself when the HR votes on the temporary tax and the road construction bills. It is entirely possible that the LDP will be torn asunder by rebellion in the coming weeks.

Fukuda under pressure

A council of LDP, Komeito, and cabinet officials have conferred and agreed to a plan to phase out the road construction fund, based largely on the plan mooted by Prime Minister Fukuda in the waning days of March.

As anticipated, the plan calls for shifting gasoline tax revenue from the road construction fund to the general fund from fiscal 2009. As Mainichi notes, however, while the government says it will be shifting "the full amount" in the general fund, there is a giant loophole in the government-ruling parties agreement in the form of the phrase "roads judged essential will be steadily maintained," which will enable the doro zoku to preserve their empire and limit the amount of revenue shifted to the general fund. Asahi raises similar questions, wondering whether the "grand reform" Mr. Fukuda claims to be delivering is actually realizable: "If it is implemented this time, it is a huge reform that will transform LDP politics — but there is strong opposition from the doro zoku and the transport ministry."

Despite these concerns — and despite the plan's neither having been approved by the LDP's executive council nor having been approved via an official cabinet decision — the governing coalition will present its plan to the opposition next week in the hope of reaching an agreement across the aisle. Whether such an agreement is possible remains to be seen.

According to Sankei, Ozawa Ichiro has made an LDP general council and cabinet decisions prerequisites for entering into negotiations over the new plan. Mainichi suggests that the DPJ is divided on this issue, although it is vague about who exactly is calling for a "prudent" stance on the road construction issue. I would argue, however, that Mr. Ozawa is on firm ground on this issue — and beyond that, he cannot afford to appear soft lest he further undermine whatever remains of his standing with the party's reformists (who are looking for excuses to throw their weight behind a candidate to run against Mr. Ozawa in September).

By Mainichi's own reckoning, the LDP remains horrendously divided, with Mr. Fukuda pressured by the party's young reformists — who, in addition to suggesting that they'll vote against the reimplementation of the temporary tax, have like the DPJ called for a cabinet decision and LDP executive council decision on the prime minister's plan — and the doro zoku, who are not particularly pleased with Mr. Fukuda's plan. Naturally the prime minister is reluctant to go to both the cabinet and the LDP general council with his plan, where he will face strident and implacable opposition. As such, Nikai Toshihiro, chairman of the executive council has dismissed both demands, stating "Why is a decision in the executive council necessary?" (And Mr. Machimura thinks the DPJ lacks democracy?) On top of the divisions within the Tokyo party is the division between Mr. Fukuda and the party's many members in prefectural assemblies, whose political fortunes rest on their ability to secure funding from Tokyo for projects in their constituencies.

I think the DPJ is in a good position here. For the sake of party unity, Mr. Ozawa can continue to stonewall without risking too much electorally. The more protracted, public, and messy the fight over Mr. Fukuda's plan gets, the better it is for the DPJ. The more aggressively the zoku giin fight to preserve their privileges — and the more Mr. Fukuda bends to them to save his plan — the easier it will be for the DPJ to paint the LDP as retrograde and anti-reformist. And the more Mr. Fukuda pushes for his plan, the deeper he drives the wedge between reformists and zoku giin, Tokyo leadership and prefectural party, bringing the party closer to fracturing.