Japan Is Redder

Prime Minister Shinzo Abe made a cabinet decision on national budget for FY 2015 on Wednesday. While huge amount of national deficit is swollen, spending of the government will not be shrunk under the banner of “Go For Abenomics.” Wrong distribution of wealth keeps on pouring money into inappropriate purposes. The leader does not stop wasting, relying on temporary income from partly vigorous economy. Pessimism for the future expands. Yes, Japan is still in red.

The total spending for FY 2015 marked new record of ¥96 trillion. One third of the spending, ¥32 trillion, was for social security with increase of 3.3% from last year. As a leader who has personal agenda for strong Japan, Abe accumulated defense budget by 2.0%, ¥5 trillion. Expense for infrastructure, which is the core of Abe’s economic policy, slightly increased with amount of ¥6 trillion. Expansion of social security was unavoidable because of demographic aging. But, others reflected Abe’s personal preference in choice of policies.

Ministry of Finance expects unusual growth of tax income. Relying on fragile market economy, which currently appears to be low in oil price and cheap on Japanese yen against U.S. dollar, it calculated ¥55 trillion for tax income in FY2015 with 9.0% growth from last year. However, the budget will not balance with that. New delivery of national bond amounts to ¥37 trillion, even though it decreased by 10.6% from last year. Postponing of consumption tax hike has not been compensated.

Debt of national and local government is still in the level of over ¥1 quadrillion. Although the government stressed that a target of halving deficit of “primary balance” in FY 2015 from the level of FY 2010 would be achieved, final goal of eliminating it by FY 2020 would still be far away. The key is how to cut spending. But, Abe does not like to see the real world, in which aged people are explosively increasing next few decades.

One answer of Abe is to let local communities to play a role of increasing birth rate. For that purpose, he is involved in increasing support for local governments. The government secured ¥1 trillion for local agenda in a sum of FY 2015 annual budget and sufficient budget for FY 2014. But, the substance of policies is apparently poor. They includes revitalizing small shops in the center of towns, in an era of mass consumption in big stores in suburbs, or financial support for farmers or venture businesses, making no difference from traditional policies. There is no sign of bureaucrats in Tokyo to release their power to control local community, while local governments require money with no earmark.