The government’s key economic policy document shows worrisome signs of reckless and irresponsible fiscal expansion.

The government seems to be smoothing the way for spending programs without carefully assessing policy priorities and seeking to ramp up budgets without securing stable revenue sources to pay for them.

If it continues pursuing such a thoughtless fiscal policy, the nation’s distribution of resources will become increasingly uneven and unbalanced. It should abandon its haphazard fiscal policy.

The administration of Prime Minister Fumio Kishida has decided on the annual Basic Policies for Economic and Fiscal Management and Reform, known as “honebuto no hoshin” (big-boned policy outline). This is a key economic policy document that serves as a basic framework for next fiscal year’s budget.

As for the fiscal policy as a whole, the document says the government should maintain the established goals for its policy efforts to restore fiscal health as it attempts to reinstitute the usual spending structure as the economy is emerging from the COVID-19 crisis and returning to normal.

There is, of course, a compelling case for bringing government spending to normal levels after sharp expansion over the past few years.

As its name indicates, the honebuto no hoshin should lay out an overarching fiscal policy vision and basic principles for the distribution of resources. The latest policy outline calls for “sustainable economic and fiscal management” and “securing revenue sources to respond to social challenges.”

But specific plans do not reflect these basic principles or broad perspectives and rather embody the Kishida administration’s expansionary stance.

With regard to the proposed sharp increase in defense spending, announced late last year in a new security policy outline, the document includes a passage indicating the government’s intention to postpone a planned tax hike to help finance the expansion.

It says the financing of the defense buildup will depend more on unstable revenue sources such as budget settlement surpluses and transfers from special accounts as these sources are expected to grow.

The Diet on June 16 passed a bill to finance the defense budget expansion with these kind of unreliable revenue sources, which sound plausible but are unlikely to be realized.

While pushing through the proposal to beef up defense spending beyond the means of the government, the administration is shelving debate on a tax increase that it fears could trigger a public backlash. This is just fiscal sleight of hand.

The administration has also delayed debate on specific and long-term financing ideas for its massive package of measures to support childbearing and child rearing. It says the package will be paid for by issuing “bridge bonds” for the time being.

Indeed, it is urgent to enhance policy efforts to boost the nation’s low birthrate. We have no objection to a sharp increase in spending to achieve this policy goal.

But it is vital to secure reliable revenue sources to finance this initiative. The administration cannot do this because it has first decided on the defense budget expansion.

The administration’s dubious approach to funding its defense and child support policy proposals relies primarily on “spending reforms.” But it is by no means easy to cut back on existing budget programs while spending cuts burden the public by causing a decline in the quality of services. 

If the financing plans go awry, we fear, the government may take the easy path of borrowing more money to finance the measures.

Japan’s state finances are in worse shape than those of most other major industrial nations. In addition, the world as a whole is fast moving away from low interest rates after years of being in an easy money environment.

The government is responsible for making well-thought-out decisions concerning what should be the policy priorities and how to distribute the burden among taxpayers under the tight fiscal restraints.

But the Kishida administration and the ruling parties keep shying away from debating and explaining these key fiscal issues in a deplorable manner that signals a complete lack of commitment to policy principles and pride in governing the nation.

They should be reminded of their heavy responsibility for ensuring fiscal rectitude.

--The Asahi Shimbun, June 17