FOCUS: Has DPJ opened door to another era of pork-barrel politics?+

TOKYO, Aug. 13 Kyodo -
In Japan, pork-barrel politics -- a term that refers to lavish spending aimed
at winning votes -- has been almost exclusively applied to the Liberal
Democratic Party, which has held power almost uninterrupted since its
foundation in 1955.

But ahead of the Aug. 30 general election, the long-ruling LDP has been trying
hard to stigmatize the campaign pledges of its archrival, the main opposition
Democratic Party of Japan, as spendthrift, as though the positions of the two
parties have already been reversed.
The DPJ's key election promises include cash handouts to families with
children, a phasing out of expressway tolls and allowances for job seekers
undergoing training.
However, not only the LDP but also many analysts have cast doubt on the ability
of the DPJ to carry out many of its pledges smoothly.
It is much easier said than done, they say, arguing that the DPJ has not been
clear enough on the details of how it will finance its high-priority policies,
which would require a total of 7.1 trillion yen in the fiscal year starting
next April.
The necessary costs would reach 16.8 trillion yen in fiscal 2013. Of the
amount, the DPJ plans to raise 9.1 trillion yen by cutting wasteful public
spending and the rest by making good use of cash reserves amassed in government
special accounts and doing away with some tax deductions.
Critics also say that the DPJ has not outlined a convincing growth strategy for
the Japanese economy.
Representing such skepticism, Finance Minister Kaoru Yosano, the LDP's key
framer of economic and fiscal policies, has criticized the DPJ as just offering
pie-in-the sky promises.
''I believe the sustainable implementation of such (costly) policies will
probably not be achieved without raising the consumption tax to more than 25
percent'' from the current 5 percent, Yosano said at a news conference earlier
this month.
The DPJ has said that by placing priority on cutting wasteful spending there
will be no need to raise the consumption tax at least during the first
four-year term after it comes to power.
Still, some analysts say the DPJ's economic measures are not all bad.
''The DPJ is not so clear on how to stimulate corporate activity and increase
Japan's growth potential in the long run,'' said Takuji Aida, senior economist
at UBS Securities Japan Ltd. ''But having said that, its approach is going in
the right direction.''
To boost the slowing economy in the short term, Aida said it would probably be
most effective to support domestic demand and change consumer sentiment,
especially given that Japan's economy has suffered the most among
industrialized countries from the recession due to its over-reliance on
overseas demand over the past years.
The measures of the DPJ, which is seen as having a good chance of winning the
House of Representatives election and wresting power from the LDP, are aimed at
achieving an early economic recovery by raising the household income of people
in the prime of life and easing concerns about Japan's insecure future.
Hiromichi Shirakawa, chief economist at Credit Suisse in Japan, said in a
report that the DPJ's steps would likely lift the country's growth rate by
0.5-0.6 percentage point in fiscal 2010 and about 0.4 point in fiscal 2011.
DPJ policy chief Masayuki Naoshima has said the LDP's criticism of the
opposition party is off the mark.
Naoshima noted there has been some misunderstanding in that many people believe
that the DPJ's measures would be implemented on top of existing polices,
leading to an assumption that there would be a shortfall in fiscal resources.
In responding to the widespread skepticism, Naoshima used a metaphor to explain
the situation when he spoke to corporate executives at the Japan Business
Federation in early August.
''Let's imagine there is a cardboard box filled with apples,'' Naoshima said.
''The ruling parties argue that new apples brought by the DPJ will not fit in
the box as it is already closely packed.''
''What we are saying is we will empty the box and put the DPJ's apples in it
first,'' he said. ''We will then check whether the other apples are damaged and
put some of them back into the box if they are good enough until there is no
more space.''
Consequently, Naoshima said it would be impossible for the DPJ at the end of
the process to find it difficult to finance its measures.
By keeping a lid on costs, the DPJ is aiming to overhaul the state budget for
the current fiscal year totaling around 207 trillion yen.
Of the total, DPJ lawmakers are particularly targeting approximately 70
trillion yen of spending that they think is less important and would not affect
ongoing social welfare programs and other beneficial services provided by the
government.
UBS' Aida believes the hotly debated issue of funding does not carry broad
economic implications, saying, ''This issue is rather political.''
Aida said, ''Even if the DPJ runs short of money, it would probably be able to
get through by issuing several trillion yen of debt-covering bonds and that
would be unlikely to have a major impact on the economy'' such as by pushing
long-term interest rates sharply higher to dent Japan's flagging growth
immediately.
Many market analysts say overseas investors are focusing more on Japan's
consumer sentiment before and after the election -- not its fiscal health -- in
deciding whether to shift their money to the world's second-largest economy.
Businessman Kenji Hayashi, who was talking about the election with his friends
in a Tokyo bar recently, said, ''It is too hilarious that the LDP is saying
Japan's debt-laden public finances will become disastrous if the DPJ forms a
government.''
''It's already disastrous,'' Hayashi, 56, said. ''I wonder which party is
responsible for Japan's mountains of debt piled up during a period of more than
five decades.''
Hayashi and his friends said the DPJ's economic steps are not perfect but the
LDP's vision of Japan's future in its platform is also imperfect and elusive.
One of the LDP's commitments is to raise disposable household income on average
by 1 million yen in 10 years, but the ruling party has not spelled out concrete
steps to guarantee the amount.
''The amount is not big and I don't think people will be moved by it,'' Hayashi
said. ''But more importantly, can you believe a promise for 10 years from
now?''
''Our living standards won't suddenly become rosy even if the DPJ wins the
election. We know that,'' he said. ''But we also know that it is about time for
a change as our livelihoods have barely changed for the better in more than a
decade.''
==Kyodo