Photo/Illutration Prime Minister Sanae Takaichi, right, acknowledges the Upper House plenary session on Dec. 16 after it passed the supplementary budget. (Takeshi Iwashita)

The supplementary budget to implement economic measures has passed the Diet.

However, Diet deliberations did not deepen even as the budget was criticized for its size, which was the largest since the COVID-19 health scare, and problems were highlighted, such as the effectiveness and urgency of the policies.

The government is now compiling the budget for the next fiscal year with an eye toward completing the work by year-end. It will be tasked with setting out policy priorities as well as placing sufficient consideration on fiscal sustainability.

The supplementary budget totaled 18.3 trillion yen ($118 billion).

Sixty percent of it, or 11.6 trillion yen, will be funded through the issuance of government bonds.

Among measures to deal with surging consumer prices, on which Prime Minister Sanae Takaichi said she would place the highest priority, one that was highlighted in the Diet from a cost-benefit perspective was rice vouchers.

Tax subsidies that local governments can freely use will be utilized, but the measure is time- and money-consuming.

So even if the central government encourages the issuance of such certificates, a number of local governments have decided not to implement it.

Another area that has been viewed negatively is 6.4 trillion yen for investment in crisis management and economic growth, which Takaichi has also strongly pushed.

A total of about 2.4 trillion yen will be distributed to 41 funds managed by the education ministry, the economy, trade and industry ministry and others.

Government bonds will cover most of the addition to the funds.

Interest payments on such bonds are expected to increase in the future as interest rates are now increasing.

While the investments are for the mid- and long term, the burden for paying the interest will be the only item that increases if the funds are not used appropriately.

Takaichi did not provide a detailed explanation in the Diet, only saying that her administration would move quickly to bring about a strong economy.

A certain set of rules should be established when funds with huge outstanding balances receive additional money.

The law states that supplementary budgets should be limited to expenses to deal with unexpected developments.

The opposition Constitutional Democratic Party of Japan and Komeito asked for a revision to the increases in the funds on the grounds that there was no urgent need.

But Komeito, along with the Democratic Party for the People, voted in favor of the supplementary budget without revision because it contained tax subsidies to be distributed to children as well as the elimination of the gasoline tax surcharge that those parties had called for.

As such, the responsibility of the opposition is also being called into question.

A large part of the budget now being compiled will likely be taken up by social security expenses to deal with the aging population, government bond expenses, tax subsidies to local governments and defense spending.

Other areas that will be difficult to cut include dealing with aging infrastructure and educational expenses because many of the programs are needed.

Among the questions that need to be addressed are the appropriate scale of the investments for crisis management and economic growth as well as whether the increased defense spending the government is seeking will actually go to equipment and personnel that are truly necessary.

And expenditures will further balloon if the government bends to the arguments of the opposition to gain its support as it did with the supplementary budget.

Government bonds should not be relied on so easily and discussions should not avoid revenue sources.

It is the duty of the prime minister to pick and choose expenditures and lay out a fiscal picture that the public can feel comfortable with in the mid- and long term.

--The Asahi Shimbun, Dec. 17

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