Domestic Challenges for the Fukuda Cabinet

The ruling coalition’s defeat in the House of Councillors election last July set the stage for a gridlocked National Diet, with the House of Representatives controlled by the Liberal Democratic Party and its coalition partner, the New Kômeitô, but the upper house dominated by the opposition Democratic Party of Japan. Ever since Prime Minister Fukuda Takeo took office in September, the main focus of political attention in the media and among the public has been on his struggle to cope with this gridlock, including an attempt to form a grand coalition with the DPJ, which produced an uproar in November. And the main policy issue has been the renewal of the Antiterrorism Special Measures Law, the legal basis for Japan’s refueling operation in the Indian Ocean for US and other naval vessels engaged in the fight against terrorism.

In this context, relatively little attention has been paid to the Fukuda cabinet’s domestic policy agenda. This year, however, that is bound to change. Let us take a look, then, at the domestic challenges facing the new cabinet, with reference to the two articles that make up this section.

First, how can we characterize the overall thrust of Fukuda’s domestic agenda? In the first article below, Kabashima Ikuo and Ôkawa Chihiro make the case that Fukuda is at heart a reformer–more committed to reform, in fact, than his predecessor Abe Shinzô. But early policy indicators, including the proposed budget the Fukuda cabinet has drafted for fiscal 2008 (April 2008 to March 2009), suggest rather that the new administration is seriously rethinking the structural reforms spearheaded by the government of Koizumi Jun’ichirô (2001—6). The draft budget is scarcely an exemplar of the "integrated reform of expenditures and revenues" that the Koizumi administration proclaimed as a goal. The government proposes to keep a freeze on increases in health care treatment charges for the elderly after April 2008, for example, and it is unclear whether it will follow through on proposed cuts in the number of teachers at public elementary and middle schools. The Fukuda cabinet also plans to increase the central government’s share of prefectural road construction costs, suggesting a return to the LDP’s traditional role in regional development. Underlying this shift in course is a stubborn resistance to Koizumi’s reforms from within the LDP, coupled with a sense of crisis within the party’s leadership following the devastating losses in the upper house’s rural constituencies last July.

The question, however, is whether the nation as a whole supports such a shift in policy. Public opinion survey results have found that supporters of structural reform outnumber opponents, notwithstanding the heavy media coverage of widening income and wealth differentials in Japanese society. Moreover, as Kabashima and Ôkawa point out, the next House of Representatives election is likely to be decided in the urban districts, where a larger proportion of voters support reform. Whether the retrograde policies Fukuda appears to be embracing will endear him to these urban voters–especially the growing block of reform-oriented independent voters–is doubtful.

While the piece by Kabashima and Ôkawa deals with the general direction of Fukuda’s domestic policies, our second article, by Minister of Health, Labor, and Welfare Masuzoe Yôichi, focuses on a very specific domestic issue that is bound to draw renewed media scrutiny this year: the public pension system, and more particularly the government’s plans to address the mishandling of more than 50 million records of payments by participants. Masuzoe blames the problem on the absence of clear lines of authority and responsibility in the Social Insurance Agency and stresses the importance of designing an administrative apparatus with built-in mechanisms to prevent the kind of government scandals that have become all too common in Japan.

This affair has put Fukuda and his cabinet on the defensive. Just ahead of the July upper house election, the administration of his predecessor, Abe Shinzô, drew up a plan to check the 50 million unidentified pension payments against its records for known participants, a process that was to be completed by the end of March 2008. And subsequent statements by Abe and Masuzoe (who has headed the Ministry of Health, Labor, and Welfare since late August) left the public with the impression that the administration was committed to matching all 50 million payments with their beneficiaries by that deadline. However, by early December it had become clear not only that the outlook for identifying all the records by the deadline was exceedingly dim but that some 20 million accounts might never be identified.

In response to this reversal, Chief Cabinet Secretary Machimura Nobutaka baldly admitted that "there was probably a tendency to simplify things, since it was the middle of an election campaign," and Masuzoe went so far as to suggest that his earlier pledge to "pay every last yen" was in the nature of a campaign slogan. The message from top government officials that campaign promises are not to be taken seriously has ignited a firestorm of indignation. As of mid-December the Fukuda cabinet’s approval rating had plunged to 35.3%, a drop of 11.7 points from early November (based on surveys by Kyôdô News Service).

Regardless of whether it will ultimately prove possible to identify the beneficiaries of the 20 million remaining mystery payments, the task is unlikely to be completed any time soon. The Fukuda cabinet is bound to come under criticism for both this failure and the LDP’s false campaign promises. Lacking strong public support for the basic direction of his domestic policies, Fukuda will find himself in a tenuous position when his administration comes under attack for its handling of the pension scandal.

The political buzz at the moment is that Fukuda intends to call a general election some time in 2008. But unless his cabinet can offer up some fresh and appealing policies in other areas, the combination of the pension debacle and the backpedaling on reform could spell another electoral disaster for the LDP. (Takenaka Harukata, Associate Professor, National Graduate Institute for Policy Studies)

© 2008 Japan Echo Inc.