AMPONTAN

Japan from the inside out

Posts Tagged ‘Otsuka K.’

Money matters

Posted by ampontan on Tuesday, February 16, 2010

MONEY MATTERS a lot to the political class, and the money that matters the most is the money they liberate from other people. How else are they going to fund their wonderful schemes to convince us how wonderful they are?

Otsuka Kohei

The technique they use to pay for these wonderful schemes is to pick the people’s pocket, take a healthy cut, wrap the rest in a bright shiny ribbon, breathe a lot of hot air and platitudes on it, and then give it back. As Your Party chief Watanabe Yoshimi noted, the process is similar to an octopus thinking it’s growing by feeding on its own tentacles. The further left of center one goes, the more frequently and more blatantly this is done, and the more self-righteously the hot air is blown.

That brings us to the Democratic Party of Japan’s family allowance proposal to dole out JPY 26,000 (almost $US 290) per child to each family every month. The income tax deductions Japanese parents already receive for their children will be eliminated. After all, how can they be expected to redistribute money to the people without taking it from the people first?

The idea is to give money to every family with children, regardless of the family income. If the family thinks they already have enough money, the national government will make arrangements for them to donate it to local government. Is that not a wonderful plan? “Here’s some of the money we took from you, but if you don’t want it, you can give it back to us.”

The DPJ swore they could come up with the scratch by eliminating government waste. (If that much money is to be gained by eliminating waste, they could stop wasting it, cut taxes by a proportionate amount, and allow people to spend their own money on their children without involving themselves in the process. But that’s not how politicians think.)

Even some in the party pointed out the funding plan was impossible to achieve. But their alternative was to make a bad plan worse—they would force local governments and the private sector to contribute.

Prime Minister Hatoyama Yukio insists that at least one or two of the promises in the party’s election platform be kept, if only for form’s sake. Well, on certain days of the week, anyway. For example, on a Sunday (the 14th), he said:

My idea for the funding source (for the family allowance) is to basically create a mechanism of cutting waste and using the amount saved.

He added that it was possible the government would not be able to provide the full amount promised right away.

Then, on a Monday (the 15th), the noted expert on fund-raising matters said:

Of course we’ll provide the full amount (of the child-rearing allowance) as planned. We’ll find the funds to pay for that by making every effort to cut expenditures.

He got indignant when the press corps suggested he was flip-flopping.

I am not flip-flopping at all!

Well, if a politician’s going to lie, in for a penny, in for a pound, as they say. It’s not as if he has a reputation for honesty to begin with.

He added:

I do not want to float government bonds as the funding source for the child-rearing allowance. That money absolutely will come from cutting expenditures.

Except it won’t—it’s not possible. Also not possible is achieving the stated objective of the program, which is to lift the birth rate.

So, where’s that money going to come from? One possibility is the general fund, which is now being engorged by funds from the “temporary” gasoline surtax. Remember how that money was allocated for building roads? They made the temporary surtax permanent and pointed the sluice in the direction of the general fund. Ain’t reform politics grand?

Another possibility is to boost the consumption tax. In fact, Finance Minister (and Deputy Prime Minister) Kan Naoto said on TV, also last Sunday:

After the budget passes (by the end of February), I want the government’s tax panel to start a comprehensive discussion on tax, such as income tax, corporate tax and perhaps consumption tax and environment tax.

I agree. I say reduce the first two and reject the fourth as unnecessary.

Here’s his justification:

We need to discuss whether the current tax system, which only generates revenues of JPY 36 trillion, is appropriate.

What we need to discuss is whether current government expenditures are appropriate, but that’s not going to occur to Mr. Kan, whose political career started in a socialist organization.

He also said that Prime Minister Hatoyama had agreed with him a few days before.

It’s time to cut and paste that “I am not flip-flopping at all” quote again!

And that’s just what the prime minister did. He reminded Mr. Kan that the party promised during the election campaign the consumption tax would not be raised for four years.

But what happens later this year, after the upper house election, say, when Mr. Hatoyama is no longer the prime minister and someone else—such as Mr. Kan—is?

Show us the money

So, how much of a bite do they want to take for the next consumption tax hike?

Otsuka Kohei, a senior vice minister in the Cabinet Office, gave us a peek at the cat in the bag on the 12th at a debate sponsored by the Japan Institute for National Fundamentals.

Mr. Otsuka is a rising star in the DPJ. A member of the upper house, he’s a handsome fellow whom the party’s called on to question LDP prime ministers in the Diet more than 100 times, starting with Mr. Koizumi. He was also involved in writing the party platform, and, as a former employee of the Bank of Japan, is considered something of a financial expert.

Sakurai Yoshiko, the former newscaster and current director of the institute, and Koizumian reform/privatization guru Takenaka Heizo questioned him specifically on this subject at the debate.

He answered:

At the next general election, we will indicate the percentage to which it should be raised and how it will be used, and receive the people’s decision.

Why?

We must obtain income to turn the primary balance back to the black, so the consumption tax will indeed be an issue at the next election.

Mr. Otsuka also added his personal opinion about that percentage.

As of now, a double-digit figure less than 20% is realistic.

In other words, the ante from now on will be double the present rate.

At a minimum. As of now.

The check is in the mail

Once that funding spigot is turned on, they’ll find all sorts of wonderful things to use the money for. Mr. Otsuka’s specific area of responsibility in the government is the renationalization of Japan Post. Also during the past week—it was a busy week—the government and the ruling party convened a policy council to discuss how to rework the postal operation with its savings accounts and life insurance policies. Jiji Press reported that some ruling party MPs expressed the opinion that “the government and beneficiaries” should assume the costs for uniform services nationwide for post, savings, and insurance.

The idea behind the government paying for uniform services is based on considerations of unprofitable post offices in remote areas, said…Otsuka Kohei. There’s that name again. He also asked:

Aren’t standards for government liabilities required, even if only for the costs for (post offices) placed in those locations as determined by the national will?

Give the man credit for a comprehensive spending plan. He’s going to push the consumption tax up to double digits and then spend it on Japan Post.

Of course they could have left the Japan Post privatization process in place and scaled back their consumption tax dreams, but nah! And did you see how he suggested the government had to fund the whole process because the national will was to provide universal services at remote locations?

The last time the people were asked their opinion specifically about Japan Post in an election, they answered by giving the privatization forces the second-largest margin of victory in the lower house in postwar history.

The Jiji article (in Japanese) noted that the government’s interpretation was that the national government has the obligation to pay for universal service and will outsource the work to Japan Post. Rather than have Japan Post assume the full costs for performing this obligation, the government has another wonderful plan to create a preferential tax system for the entity.

In other words, taxpayers will pay both both directly and indirectly to maintain the network.

And what if they can’t afford it? Well, Mr. Otsuka was one of six Diet members to write an article in the monthly Voice in September 2003 calling for Japan to accept 10 million immigrants. More taxpayers! More money!

The man’s just full of wonderful ideas, isn’t he?

One reason for privatizing Japan Post was to keep the money in the savings accounts and life insurance policies from falling into the clutches of politicians to use for public works schemes.

Speaking of which…

On the road again

That same day, the government submitted the individual allocations for the 2010 public works budget to the directors of the lower house Budget Committee. The government proposes to freeze 49 road construction projects with individual budgets of less than JPY 100 million they’re conducting as national highway projects.

Good idea, right?

But the Ministry of Land, Infrastructure, and Transport called for the freeze of 120 projects during the budget request period at the beginning of last December.

In other words, after thinking about it for two months, the government thought better of it and restored about 60% of those road construction projects.

The common assumption for the cause of the government’s sudden attack of white line fever is their desire to satisfy what were termed “strong requests” by the DPJ and local governments in advance of the summer upper house election.

The bill for those projects will be JPY 60 billion.

Is the reason for renationalizing Japan Post getting any clearer?

Oh, but the national government won’t pay for everything. The plan was to eliminate in FY 2010 the liability of local governments to maintain and manage the roads built by the government. You remember how the DPJ was so anxious before the election to please local politicians in general, and people like Osaka Governor Hashimoto Toru in particular?

The local government liability for these roads will be maintained.

In questioning today at the Diet, Land, Infrastructure, and Transport Minister Maehara Seiji insists that requests from the DPJ were not a factor. But the party still needs some work on its message coordination skills, it would seem. Tottori was the prefecture that benefited the most from the restored projects, and the Yomiuri Shimbun reports that senior officials of the Tottori DPJ branch claim their “strong requests” were the reason for the restoration. Local party officials in the Kyoto Metro District, Mr. Maekawa’s home turf, also took credit for the restoration of road construction projects there, too.

Here’s a thought: Green tea works just as well for Tea Parties as any other kind.

Afterwords:

I’ve had two posts on the government’s family allowance scheme in the works for a while, and it looks like now’s the time to finish them. But in the meantime:

The stated objective is to raise the birthrate. The more likely result—as has happened in the past—will be a depressed birthrate.

When their wonderful plan does not increase the birthrate, the left will claim that the measures were insufficient and that even more government programs and outlays are required.

That’s the only thing the left offers that you can take to the bank.

And if that doesn’t work, Mr. Otsuka can always bring up his plan for 10 million immigrants again.

The real objective is implementing a dependency agenda. The idea is to keep the people gnawing on the government’s shin, as the Japanese put it, from birth to death. A self-reliant populace?

That doesn’t matter. It’s counterproductive, not to mention counter-revolutionary.

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