Change Koizumi's economic policy -- Akahata editorial, January 22, 2003

Parliament has begun discussing a draft supplementary budget for FY 2002 (ending on March 31, 2003).

The draft budget includes 1.5 trillion yen for public investment, dubbed "Structural Reform Promotion,"and 1.5 trillion yen for measures for improving the employment situation and helping small businesses. Due to the economic slowdown, tax revenue is expected to drop by 2.54 trillion yen from the initial budget forecast. The proposed additional budget, therefore, includes funding to cover shortfalls.

The draft budget seeks five trillion yen in extra fiscal resources from government bond issuance to make up for budget shortfalls. This is what the draft supplementary budget is really about.

It will only increase bad loans

The term "structural reform promotion" is used as a cover for using more tax money for promoting mega-development projects without a chance of success, including the construction of an international airport in central Japan on the pretext of the need for "increased international competitiveness and urban revitalization."

The budget bill also focuses on funding the private sector urban redevelopment projects. In major cities, including Tokyo, Yokohama, Nagoya, and Osaka, there's no more demand for office buildings. Encouraging a construction boom of skyscrapers will further exacerbate the present oversupply of office space. Researchers of urban problems are warning that what is called the office space "bubble" will burst some time in 2003.

Clearly, far from promoting "structural reform," the government proposal will allow tax money to be used only to create more bad loans.

To begin with, additional funding for public works projects is something the prime minister has declined to accept as a strategy because it is not "effective" in stimulating the economy. If the Koizumi Cabinet is to count on such a step, it will be proof of the cabinet reaching an impasse.

Also, the fiscal reconstruction effort, another selling point of the Koizumi Cabinet, has ended in failure because the government has had to cover shortfalls of tax revenue by issuing government bonds.

The supplementary draft budget will lead the country astray and the proposed draft FY 2003 national budget can be described as one of increasing recklessness.

The cabinet's plan will force people to pay an extra four trillion yen for social programs and impose a further tax increase on working people. The government policy of accelerating the write-off of bad loans held by banks will drive more smaller companies out of business and more workers out of work.

Deficit financing will exacerbate due to the sluggish economy and corporate tax cuts which only add to profit for major successful corporations rather than helping to improve the economy overall.

The problem now is that Prime Minister Koizumi and other cabinet members, as well as the Council on Fiscal and Economic Policy, are inclining to propose a consumption tax rate increase and an artificial inflation policy.

We cannot condone the government's reckless measures that will rob the people of their income and assets.

The Koizumi Cabinet's mission has been to provide a life support system for Liberal Democratic Party politics, which had repeatedly bogged down in fiscal and financial policies and reached an impasse.

But it has further worsened the economy, increased banks' bad loans as well as deficit financing, and reached an impasse. All this has led to a reckless run to destroy the basis for living conditions.

Need now is to help rehabilitate living conditions

No way can we allow old LDP economic measures to revive. Undoubtedly, the Koizumi plan for economic recovery through abandoning the weaker and making the strong even stronger is failing.

This is not an era of high-rate economic growth in which increased competitiveness of major corporations will be of some help to improve the living conditions of the people. The living standards of the people must be improved as an essential condition for economic recovery.

In this regard, the Japanese Communist Party's following four-point proposal is important: 1. stop the plan to increase people's burdens of payment for social programs; 2. oppose a tax increase on working people; 3. stop the policy of pushing smaller businesses out of business; and 4. strengthen measures for job creation as well as assistance to the unemployed.

Let's block the Koizumi Cabinet's reckless run and call on the government to change economic policy to put more emphasis on improving the living conditions of the people. (end)