The government has thrashed out a supplementary budget to finance policy measures to boost the economy.

The spending plan will add more than 13 trillion yen ($85.69 billion) to the government’s total spending in the current fiscal year and calls for raising nearly 9 trillion yen of additional funds by issuing new bonds.

The public finance law allows the Cabinet to formulate an extra budget only for limited purposes, basically for covering “expenditures that have become especially urgent based on reasons that arose after the formulation of the (initial) budget.”

However, many items in this additional spending blueprint deviate from this principle, raising concerns about fiscal discipline that cannot be overlooked.

The problems with the extra budget should be rectified through parliamentary scrutiny.

The scale of expenditure, although smaller than the 20 trillion to 30 trillion yen in additional spending repeated in the aftermath of the COVID-19 pandemic, is comparable to the outlays made in response to the 2011 Great East Japan Earthquake disaster and the global financial crisis triggered by the 2008 failure of U.S. investment bank Lehman Brothers.

The government claims that it has "compiled necessary and effective policy measures." However, the details of the plan belie the claim.

The plan includes allocating more than 4 trillion yen to a fund supporting the semiconductor industry and space development projects over the medium to long term. Additionally, around 1.5 trillion yen is earmarked for ongoing public works projects for such purposes as disaster prevention and national resilience.

It is questionable whether the government is capable of using such massive amounts of expenditures provided by a supplementary budget effectively and efficiently.

Careful and meticulous examination and discussion are indispensable for ensuring the money will be spent wisely, and expenditures for these big-ticket policy programs are not appropriate for an extra budget to meet urgent spending needs by the end of the fiscal year.

Moreover, many of the proposed measures to mitigate the effects of rising prices, such as uniform subsidies for gasoline, are inefficient and lack focus.

With the budget amendment, the government also plans to change the use of the reserve fund in the initial budget from financing "COVID-19 and inflation measures" to "inflation measures and wage increase promotion.” This change also poses significant problems.

The contingency fund represents an exceptional component of government budgeting provided by the Constitution, exempted from the requirement of Diet scrutiny to cover unforeseen budget shortfalls.

Policy actions to promote wage hikes should be debated at the Diet as part of normal policy areas. Expanding the use of the emergency fund to cover such areas risks indefinitely undermining the foundation of fiscal democracy.

The government's indifference to swelling deficit financing is also alarming. With the planned additional issuance, the government will issue new bonds worth more than 44 trillion yen in this fiscal year, well above the pre-pandemic levels in the 30 trillion yen range.

Prime Minister Fumio Kishida's much-ballyhooed tax reduction initiative for the next fiscal year, including income tax cuts, will essentially be financed by debt.

Although Kishida has repeated the mantra of "returning increased tax revenues to the public," the reality is that the tax revenues have been falling short of spending by large margins.

As Finance Minister Shunichi Suzuki has admitted in answering questions at the Diet, recent increases in the tax receipts have already been spent.

Under the Kishida administration, which has habitually adopted a haphazard approach in regard to both expenditures and revenues, fiscal discipline has seriously declined.

With the national debt outstanding of more than 1,000 trillion yen and interest rates creeping up, the ballooning cost of debt service will inevitably strain policy expenses, causing the taxpaying public to suffer dire consequences.

The administration has been striving to offer tax reductions and benefits without securing financial resources. This raises serious questions about the government's responsibility for the future.

Both the ruling and opposition parties will face major tests of their commitment to fiscal rectitude during the Diet debate on the supplementary budget.

--The Asahi Shimbun, Nov. 14