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.

The LDP is shocked — shocked! — to find waste in the budget

I previously wrote that the LDP, in the midst of a debate over whether and when to raise the consumption tax to cover growing pensions liabilities, also organized a project team — headed by Sonoda Hiroyuki and staffed with fervent young reformists like Kono Taro and Yamamoto Ichita — with the purpose of identifying "waste" to remove from the budget.

The LDP hopes that "exterminating" waste will provide 200bn yen for the budget. To that end, the project team submitted a proposal to the prime minister on Tuesday. The proposal is something of a wish list, the items that the project team would most like to eliminate from the budget. There are the typical items one would find on such a list: "recreation," late-night taxi rides for bureaucrats (the latest outrage), PR documents, no-bid contracts for public corporations (note how they slip that in among more trivial items), and subsidies to public corporations (ditto). The proposal also calls for reducing duplicated work and more oversight by auditors.

All of this sounds fine. These measures would undoubtedly help Japan tackle its budget difficulties and free up money to finance growing liabilities.

But then remember that the LDP has been in power for more than fifty years. It presided over the ballooning of Japan's national debt, it dithered as Japan's population aged, and it failed to refit Japan's welfare institutions for the age of globalization. And now it wants to eliminate government waste to deal with these problems?

If the DPJ is smart, this should be a losing issue for the LDP, reminding voters how now, after years of mismanaging Japan's finances and coddling the bureaucracy, the LDP is ready to crack down on wasteful spending. The LDP would prefer that the public didn't think too much about wasteful spending in the first place, how it got there, how long it's been there. It didn't appear magically, and it didn't appear overnight. It's not a disease or a natural disaster. It is the product of decisions made by the Japanese government — by the LDP — over the course of decades. The DPJ would be wise to remind the Japanese people of this at every opportunity.

And people wonder whether the DPJ can be trusted with power. The DPJ will undoubtedly make mistakes of its own if and when it forms a government, but for now it is the LDP that should be judged in an election, not the DPJ.

Seems simple enough, right? And yet both the Japanese and the foreign press are obsessed with the idea that the DPJ might somehow be worse than the LDP at governing Japan.

Meanwhile, the DPJ might get an assist from the LDP's zoku giin, who will undoubtedly fight tooth-and-nail to ensure that their pet projects aren't classified as waste and eliminated, thereby exposing the LDP's sordid underbelly to the public yet again.