HATOYAMA FACING ROUGH SEAS?

Japan’s new prime minister, Hatoyama Yukio, launched his cabinet on September 16. Roughly a month later, on October 11–12, Asahi Shimbun carried out a public opinion poll that found 65% of respondents in support of the new cabinet. There are two factors behind this strong support. First, the Hatoyama cabinet has brought about considerable change in the policymaking process, a refreshing sight to the electorate. Second, the cabinet has carried out several steps symbolic of a fresh start, which have gone over well with the public.

In this comment I examine the ways policymaking methods have changed under Hatoyama’s leadership, looking mainly at the examples of the budgetary issues, which have been a focus of his cabinet’s decisions to date. I will then deepen this exploration with commentary from Inamori Kazuo, Sakakibara Eisuke, and Terashima Jitsurô, widely viewed as key advisors to Hatoyama. (Articles by all three are included in this section.)

Some of Hatoyama’s first decisions after taking office were to put an end to some of the spending contained in Prime Minister Asô Tarô’s supplementary budget for fiscal 2009 (April 2009–March 2010) and to cancel all budget requests received by his predecessor, making the government ministries and agencies submit them once again to his cabinet. These steps were clear indications that the new cabinet would not be bound by the policies of Liberal Democratic Party–led cabinets in the past as it charted its own policy course; they showed that the nature of policymaking has changed greatly with the launch of the Hatoyama cabinet.

To begin with, politicians are now taking more leadership than before in policy decisions. In particular, the Diet members assigned to the ministries in the central bureaucracy as ministers, senior vice-ministers, and parliamentary secretaries are beginning to take the reins. The Democratic Party of Japan is making progress toward the centralization of decision-making power in the cabinet, one of the pledges in its election campaign "manifesto." In a departure from the standard process, Diet members outside the government did not wield their influence in the course of altering Asô’s budget or requiring the agencies to resubmit their funding requests. From its inception, this cabinet was designed not to rely on the method used by previous LDP-led cabinets, with a policy-planning organ in the party approving all cabinet policies ahead of time. This is why the DPJ has done away with its Policy Research Committee, the party unit that would ordinarily draft policies for cabinet use.

While this trend toward a more active cabinet is apparent, it remains unclear whether the Democrats are following through on their campaign pledges to bolster the leadership capabilities of the prime minister himself and the staff and organs that support him. On September 18 the Hatoyama cabinet reached a decision to launch the Government Revitalization Unit. This organ is expected to play a major role in budget compilation. The state minister in charge of this unit and his senior vice-minister have already shown leadership in this area, such as by directing the cabinet ministers to increase the amounts of funding to be shut off as part of the scaling back of the previous cabinet’s supplementary budgets. This organ will remain busy as it examines the various projects for which funding has been sought for fiscal 2010 and decides where to reduce the requested budgets from the ministries.

The National Policy Unit, also promised in the manifesto, remains something of a question mark, though. This group was also launched by cabinet decision on September 18. Attention had been focused on the establishment of this new unit ever since the DPJ won its House of Representatives majority in the August 30 election, but in its current form the unit itself has yet to play a notable role in the policy-formation process.

Originally the cabinet planned to submit a bill to the extraordinary session of the Diet convening at the end of October to upgrade the National Policy Unit to bureau-level status. This has now been postponed until the ordinary Diet session to begin next year, an indication of the difficulties involved in establishing this new institution. Existing law allows the prime minister to create an organization to assist in the process of crafting basic policy for the nation. In fact, however, such an organization already exists within the Cabinet Secretariat, headed by an assistant chief cabinet secretary. It may be difficult to define the relationships between the National Policy Unit and the existing policy apparatus. Another thorny issue will be how to divide the roles of the minister in charge of this unit and the chief cabinet secretary, who heads the Cabinet Secretariat. It is unclear whether the unit will be able to take on any serious role in its current provisional state when its eventual form remains unclear.

It should also be noted that even if his supporting institutions are bolstered, in the end the question will remain whether the prime minister himself is willing to exercise leadership. Since taking office Hatoyama has not clearly done so, although this may be due to the facts that the halted supplementary budget spending consisted of numerous small steps, while the ministries’ budget requests are handled on a per-organ basis, leaving the prime minister little room for clear, broad strokes of leadership.

This was not the case in the selection of the next president for Japan Post Holdings at the end of October, though, an event that left many wondering about the leadership capabilities of the prime minister. DPJ President Hatoyama had even before the general election stated that his party would replace Nishikawa Yoshifumi as president of Japan Post if it took power. On October 20, after the new cabinet’s formation, Nishikawa announced he would resign, and Kamei Shizuka, state minister for financial services and postal reform, stated that Saitô Jirô, the president of Tokyo Financial Exchange Inc., would step into the vacant spot. But this was a politically controversial appointment. The DPJ had campaigned under an anti-bureaucrat banner, fiercely criticizing the practice of amakudari, in which high-ranking mandarins "descend from heaven" into cushy positions at government-affiliated corporations and organizations. The party notably voted against the nomination of a former administrative vice-finance minister as governor of the Bank of Japan, citing his background as a top bureaucrat as its main reason for opposing the choice. For this reason, the party’s selection of Saitô, who once served in the very same Ministry of Finance post, to head Japan Post—a company owned fully by the government, which wields great control over its dealings—made many observers wonder at this break with its past policy stance. Moreover, Kamei appeared to be in the driver’s seat for this selection: there was little sign that Prime Minister Hatoyama had been fully briefed in advance, or that he had shown leadership in choosing Saitô as Japan Post’s next president.

The prime minister will need to have a firm hand on the wheel in dealing with the issues his cabinet is going to face on the domestic and diplomatic fronts from now on. Domestically speaking, the largest task ahead is the drafting of a new budget for fiscal 2010. Government agencies’ requests total ¥95 trillion, a considerable leap from the ¥88.5 trillion total for the fiscal 2009 general budget. What is more, tax revenues in the coming fiscal period are not expected to clear ¥40 trillion. These conditions present Hatoyama with the steep challenge of how to keep the expanding deficit to a minimum.

Sakakibara Eisuke, whose article we carry below, does not see deficit spending and issuance of new government debt to cover it as serious problems, and Hatoyama may be swayed by such thinking. Increasing deficit spending without relaxing monetary policy will predictably lead to a stronger yen, thereby dampening the impact of any economic stimulus measures the government might take. In order to promote growth for the Japanese economy while heading off the deflation now under way, the Bank of Japan should carry out further monetary relaxation. This is an area closely tied to the issue of the central bank’s independence; here, too, the prime minister will need to flex his leadership muscle. It should be noted, though, that neither Sakakibara nor Inamori Kazuo, another author in this issue’s politics section, shows much interest in the problems of deflation and economic growth, to say nothing of the finer points of the Bank of Japan’s monetary policy.

In the foreign policy arena, meanwhile, the primary task will be to maintain firm, close relations between Japan and the United States. The major issue affecting this relationship today is the question of finding a new location for the Marine Corps Air Station at Futenma, Okinawa. It is clear that Washington hopes to see this cleared up as soon as possible. No solution will come without leadership from the prime minister, but to date Hatoyama has shown no sign of moving to deal with the question in a timely manner. At the same time, Terashima Jitsurô, an advisor to the prime minister on foreign policy matters, implicitly argues that the US military bases now located on Okinawa should be relocated as far as Guam, or even Hawaii.

The public-opinion honeymoon the Hatoyama cabinet now enjoys may not last beyond the end of the year. This is because if the prime minister maintains his hands-off stance and leaves the key issues outlined above untouched, he will soon find himself struggling to maintain his administration in the face of two serious problems: a worsening economy and degradation in the US-Japan relationship. In the politics section of this issue of Japan Echo, we also carry two pieces addressing the significance of and issues related to the transfer of power to a new political party in Japan. (Takenaka Harukata, Associate Professor, National Graduate Institute for Policy Studies)

© 2009 Japan Echo Inc.