The top news this morning regarding the consumption tax is the first departure from the Democratic Party of Japan since the Cabinet's approval of the government bill raising the tax to 10%, an event that blew apart the DPJ's coalition partner, the People's New Party.
The departing MP is Kiuchi Takatane, a first-time district seat holder from the Tokyo #9 constituency. According to his blog, he has tendered his resignation from the party on the grounds that he ran on the program of changing the way government conducted its business. He wants the government to cut back on its own spending and the losses incurred through the various quasi-governmental organizations living off the public purse. However, the Noda government, rather than focusing on putting the government and the social welfare system on a more sustainable course, is simply swallowing the consumption tax rise cooked up by the Ministry of Finance, without considering the significant economic impact the tax rise will have on the Japanese economy. (J)
Now this is the basic Ozawa Ichiro line regarding the Noda government's approach to the consumption tax. In terms of political optics, the Ozawa approach is the smarter one: pass bills cutting the number of legislators and their wages, carry out the recommendations of the Government Revitilization Unit (GRU), then go to the people asking for more of their hard-earned yen. A group of 33 first-time legislators indeed presented a letter to DPJ Policy Research Council Chairman Maehara Seiji on the 29th begging him to move forward on a bill reducing the number of proportional seats in the House of Representatives from 180 to 100 -- even though this cut would eliminate the reelection chances of some of those with their signatures on the letter.
However smart this plan in terms of electoral politics, it is unworkable in terms of Diet politics and the Cabinet's hopes of implementing any changes in government policies. The New Komeito, and by extension its ally the Liberal Democratic Party, will not countenance a bill cutting the proportional seats in the House of Representatives by any significant number on the grounds that all of the New Komeito's seats in the House of Representatives are proportional seats. As for carrying out the recommendations of the GRU, Prime Minister Noda seems to realize that despite the DPJ's historical antipathy toward the national government's bureaucrats, he cannot fight wars on two fronts simultaneously: one against the opposition parties in the Diet and another against the bureaucrats. Not that Noda not willing to stick it to the bureaucrats when the opportunity presents itself, as the passage of the bill cutting bureaucratic pay by an average of 7.8% indicates. However, this cut was a New Komeito proposal, meaning that Noda had to expend almost no political capital in winning its passage through both Houses of the Diet.
There is, of course, the other problem with the Ozawa program in its being irrelevant to the actual budgetary problems of Japan. While there is tremendous waste of government resources, the squeezing of ministries and the quasi-governmental organizations will result in risibly small savings.
So why is Kiuchi first out the door?
Undoubtedly because Kiuchi can afford to be. He is a former Mitsubishi Bank executive who left the bank for stints in the securities departments of Deutsche Bank and UBS, finishing out his finance career as the managing director of investment banking at Merrill Lynch Japan. (J)
In other words, Kiuchi does not rely on his Diet member paycheck to maintain his lifestyle. For him, it must look like pocket change.
Ozawa was smart in choosing his followers, targeting not only telegenic young candidates but also local worthies of independent means, for whom politics was not a career or a job but a passion.
Kiuchi will not be joining the Kizuna Party (J), the party founded by mostly Ozawa loyalists who defected from the DPJ late last year in opposition to the government's plans regarding the consumption tax. Shinto Kizuna has proven to be something of a political Siberia, unable to work with the government of course, but unable to join the opposition either. (J)
The party has the smell of death about it.
Instead Kiuchi will be, or in his eyes already is, an independent. Running as an independent is a bit of a gamble as his opponent is the former LDP holder of the #9 District seat. Kiuchi beat his LDP opponent 47% to 42% in the August 2009 elections. Come next election, Kiuchi will have no institutional support or anti-LDP wind at his back. He will also be the incumbent when the electorate may be in a "throw the bums out" mood. On the plus side, Kiuchi can run as the anti-tax candidate.
Will many other member of the DPJ be following Kiuchi's example, putting pressure on the government to abandon its plans of a quick vote on the consumption tax bill in the House of Representatives? Possibly, though few can boast the ability to support oneself available to Kiuchi.
Will the defection of Kiuchi and others make it easier for LDP President Tanigaki Sadakazu and New Komeito leader Yamaguchi Natsuo to pretend to ignore Noda government entreaties to have their parties' members vote for the bill in the House of Councillors? Sure, for at least a while. Given Ozawa's political smarts, after having delivered the double punch on Friday of the resignations of some 20 his stalwarts from their government and party posts, he will likely have defections of his followers coming out in dribs and drabs so to have the news of the DPJ's coming apart dominating the political narrative. The longer the blood letting goes on the harder it is for Noda Yoshihiko to offer a credible front in his bargaining with the opposition.
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