Japan’s government yesterday approved a record-high budget, vowing to take “unprecedented” action to weather a painful recession that is expected to only get worse in the new year.
The Cabinet sent to parliament a budget of ¥88.55 trillion (US$980 billion) for the year from April next year that covers tax cuts and cash rebates but slashes foreign aid and worsens an already ballooning debt.
“We need to take unprecedented measures when in an extraordinary economic situation,” Japanese Prime Minister Taro Aso told a news conference soon after his Cabinet approved the budget.
“Japan cannot evade this tsunami of world recession. But by taking bold measures, we aim to be the world’s first to come out of recession,” he said.
He warned he expected “conditions next year around the world to drop rapidly.”
Japan’s economy, the world’s second-largest, has contracted for two straight quarters as demand overseas dries up for its cars, electronics and other exports.
In only three months in office, Aso’s own approval rating has plunged alongside the economy, with recent polls showing that the opposition is more popular than his long-dominant Liberal Democratic Party.
Aso demanded that the opposition — which controls parliament’s less powerful upper house — quickly act on the budget.
He ruled out calling an immediate election, though one must take place by September.
“Now that we are in the midst of a once-in-a-century crisis, we are not in a position to talk about such things. I think it’s impossible,” Aso said.
But shortly after his remarks, a ranking member of his party sided with the opposition in urging him to call elections.
In a visible show of defiance, Yoshimi Watanabe, the former minister for administrative reforms, stood from his seat in the lower house to vote for the opposition-sponsored resolution.
“Only elections can break the deadlock,” Watanabe, son of a former deputy prime minister, told reporters afterwards.
The measure, however, was rejected by the ruling bloc, which controls the powerful house.
Aso offered an unusually vigorous explanation of his budget.
Breaking tradition with Japanese prime ministers who speak from a lectern, Aso took a hand microphone and a pointer to show his government’s economic proposals.
The government distributed colorful documents outlining the measures, including cartoons of happy people enjoying tax cuts and cash payouts.
The general-account budget for the next fiscal year comes to an all-time high of ¥88.55 trillion, up 6.6 percent from this fiscal year’s initial budget.
Issuance of government bonds soars 31.3 percent from last year to ¥33.29 trillion to make up for an expected drop in tax revenue. Japan already has the biggest public debt of any major economy as a percentage of GDP.
The spending increase reflects an emergency economic package that Aso announced earlier this month and includes tax cuts for homeowners, loans for unemployed workers and public cash injections to banks.
Aso plans to distribute ¥2 trillion back to households in cash stipends, worth ¥64,000 (US$700 dollars) for a family of working-age parents and two children.
He has also urged business leaders to rethink their thousands of job cuts, saying they would only hurt the economy further.