Credibility of policy damaged due to economic stimulus measures
(From The Japan Times March 8 issue)

政策への信頼を損ねた経済刺激策

A bill to implement the second supplementary budget for fiscal 2008 has been enacted with a second vote in the Lower House — where the ruling bloc has a two-thirds majority — after the opposition-controlled Upper House voted it down. Thus the ¥2 trillion cash handouts for all households and other economic stimulus measures are set to be carried out.

The problem is whether the cash handouts will have enough of an effect on the economy. By the end of fiscal 2008, or March 31, residents in only about 20 percent of the nation's municipalities will have received the cash. An immediate stimulus effect from the cash handouts is unlikely.

People thought the ¥2 trillion could be put to better use. Various polls showed that some 70 percent of the polled were against the cash handouts. Not only the opposition parties but also some Liberal Democratic Party lawmakers proposed that the money be used for measures to help ensure employment. It must be watched carefully whether the ¥2 trillion handout will have a meaningful effect on the economy. If it is found to have no such effect, the responsibility of Prime Minister Taro Aso and the ruling parties will be great because they pushed the cash handouts despite the opposition of the opposition parties and the public, which was based on a reasonable argument.

It is believed that the ¥12 trillion in fiscal spending so far will not be enough to rekindle the economy. The Cabinet Office estimates that in the October-December quarter of 2008, in which gross domestic product in real terms contracted by an annualized 12.7 percent, there was a demand deficiency of about ¥20 trillion. As the gap is likely to grow, Mr. Aso is expected to order the ruling parties to come up with a new stimulus package. But one must wonder whether a Cabinet whose approval rating is hovering around 10 percent can convince the public to trust its judgment.

2008年度第2次補正予算の関連法が、与党が衆院で3分の2の多数で再可決し、成立した。全世帯への総額2兆円の現金給付ほか経済刺激策が実行される。

問題は、給付が景気対策として有効かどうかだ。年度内に支給する自治体は全体の2割という状況で、景気刺激の即効性はなさそうだ。

2兆円にはより賢い使い道があると、世論調査では7割が給付に批判的だった。野党のみならず与党の議員も雇用安定への利用を提案した。給付が景気浮揚効果をもたらさなかった場合、麻生総理と与党の責任は重大だ。

12兆円の財政支出では経済は蘇らないとみられている。需給ギャップが広がる可能性を受けて、麻生総理は与党に追加景気対策を出させるだろう。だが支持率10 % 台の内閣がその判断を信じるよう国民を説得できるか。