Japan’s ruling party, facing possible defeat in an election this month, tried to counter the opposition’s policy plans yesterday with a pledge to boost household income and revive the struggling economy.
Japanese Prime Minister Taro Aso’s Liberal Democratic Party (LDP) promised in its platform to boost disposable household income on average by at least ¥1 million (US$10,470) by 2020 and achieve economic growth of 2 percent by the second half of the 2010 fiscal year, which ends in March 2011
The policy pledges came as data showed Japan’s jobless rate rose to a six-year record high of 5.4 percent, reinforcing views that the job market will take time to recover despite recent improvements in industrial output.
The LDP also portrayed itself as the fiscally responsible party, promising to repair the country’s tattered public finances and, once the economy recovers, raise the 5 percent sales tax to help fund the growing costs of a fast-aging society.
“The difference between us and other parties is that we have the ability to take responsibility,” Aso told a news conference where the platform was unveiled.
Surveys show that the LDP is at risk of losing to the opposition Democratic Party of Japan (DPJ) in an Aug. 30 general election, which could end more than half a century of almost unbroken reign by the business-friendly party.
While an opposition win would not mean a drastic shift in policies, it would raise the chances of breaking a stalemate in parliament, where the Democrats and smaller allies control the upper house and can delay bills.
The opposition Democrats have promised to put more money in the hands of consumers by providing child allowances, eliminating expensive highway tolls and making gasoline cheaper to boost domestic demand. They argue their spending plans are fundamentally different from the LDP’s traditional emphasis on policies that benefit industries and firms.
The Democrats said yesterday their spending plans would raise economic growth by 2 percentage points in the fiscal year from April 2012 and rejected accusations of fuzziness on funding.
“We have the funds, it’s just a question of prioritization,” Democratic Party policy chief Masayuki Naoshima said in an interview.
The LDP, which has attacked the Democrats as being profligate on spending, risked being criticized for echoing the opposition focus on consumers, some analysts said.
“They are disparaging the Democrats ... as fiscally irresponsible,” said Koichi Nakano, a professor at Tokyo’s Sophia University.
“If they start to do something else because they are worried about the effectiveness of the DPJ campaign, they will look somewhat schizophrenic,” Nakano said.
Robert Feldman, chief economist at Morgan Stanley in Tokyo, said the LDP — which has already backtracked on previous fiscal reform targets — needed to spell out details of how it would reduce the public debt, already nearly 170 percent of GDP.
“All they have said is that they will make the economy better and then will hike taxes. That doesn’t cut the mustard as an economic policy,” he said.
Failure to spell out its funding plans could put more pressure on the Bank of Japan to keep its easy monetary policy, UBS Securities chief economist Takuji Aida said.
Four years ago, charismatic leader Junichiro Koizumi led the LDP to a huge victory a lower house election on a platform promising to push ahead with market-friendly structural reforms, but such measures got hardly a nod in the new party promises.
“In recent years, we pushed for reforms to energize the economy, but distortions such as gaps in income and the impoverishment of the regions have increased. We cannot continue to ignore such problems,” Aso said.
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