Do not shift responsibility of deficit onto welfare!

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Do not shift responsibility of deficit onto welfare!
Akahata editorial (excerpts)

Ministries and government agencies are preparing their FY 2007 budget requests to be submitted at the end of August.

The Koizumi government "Basic Policies for Economic and Fiscal Management and Structural Reform" requires successive governments to keep on curtailing social welfare services for a long period of time. The ruling Liberal Democratic and Komei parties want to make the FY 2007 budget a starting point to implement this long-term plan.

However, it is the misgovernment concerning both revenue and expenditure that has created enormous budget deficits.

Japan's military spending of five trillion yen, the largest amount after the United States, squeezes the national finances. At the behest of U.S. President George Bush, Japan is wasting tax money by even pouring it into base construction in the U.S. territory of Guam.

In the 1990s, national and local public governments spent 50 trillion yen a year in public investment programs. Reckless increases in large public works projects have substantially inflated fiscal deficits.

In the name of "structural reform," the government has not only lowered the maximum rate for inheritance and income taxes but reduced tax rates on capital gains and dividend income. This deals a heavy blow to the foundation of revenue.

According to the Finance Ministry, corporate profits amounted to 45 trillion yen in FY 2004 exceeding that of the 39 trillion yen mark reached at the peak of the bubble economy in FY 1989. Nevertheless, corporate tax revenues decreased by eight trillion yen from 19 trillion yen during the same period.

The Koizumi Cabinet blames social welfare spending for the deterioration of the state of public finance in order to hide the real cause such as tax breaks for large corporations and very wealthy people and increase in expenditures on military and public works projects.

Article 25 of the Constitution states, "In all spheres of life, the State shall use its endeavors for the promotion and extension of social welfare and security, and of public health."

The government has an obligation to maintain and improve social welfare services to ensure people's right to live. Thus, its fiscal policy must give top priority to social welfare.

A think tank of the Japan Medical Association reported that in FY 2004 the national debt increased by 78 trillion yen, but that social welfare spending increased only by 600 billion yen. It pointed out that while the negative effect of past public work projects is still significant, the government has dispatched the Self-Defense Forces to Iraq, maintained the so-called "sympathy budget" for the U.S. forces, and even will pay for the U.S. military realignment, though it has drastically cut social welfare spending.

It is necessary to fundamentally change the policies that have caused the financial collapse, not only to guarantee people's right to live but also to seek real reform to reconstruct the country's finance.
- Akahata, August 23, 2006