Potential DPJ-Replacements of PM Kan
On June 22, the last day of Japan’s parliamentary session, the Diet approved a proposal by the ruling-Democratic Party of Japan (DPJ) to extend the current session by seventy days in order to ensure passage of legislation for post-earthquake reconstruction. This follows a pledge made by Japan’s Prime Minister Naoto Kan to step down before he survived a no-confidence vote on June 2, 2011. Though Kan did not provide a timeline for his resignation, this is likely to occur in August 2011. The following profiles eight members of the DPJ who could challenge Kan for leadership in the DPJ and as Prime Minister. The next PM will be Japan’s sixth in five years.
Yoshihiko Noda, Finance Minister, 54
Noda has emerged as a top contender to replace PM Naoto Kan as leader of the DPJ and next prime minister. Noda is considered to be more hawkish on fiscal issues than Kan and supports raising Japan’s consumption tax to help finance reconstruction efforts and reduce Japan’s debt burden. Noda supports a strong USD and intervention in the currency markets when the JPY appreciates to undesirable levels. In September 2010, Noda oversaw Japan’s first currency intervention in six years to prevent a further rise of the JPY. Noda was a strong supporter of the 44.3 trillion yen limit in bond issuances that PM Kan implemented in for FY2011. Noda believes that stemming deflation is an urgent task for the Bank of Japan (BoJ) but has not supported inflation-targeting as an official policy of the central bank.
Seiji Maehara, former Foreign Minister and head of DPJ, 49
Maehara has not ruled himself out as a possible contender to succeed PM Kan. In March 2011, Maehara stepped down as foreign minister after he received donations from a non-Japanese resident, which is prohibited by Japanese law. Maehara supports a $125 billion reconstruction package saying, “If the funding bill is not passed, it will be a big drag on the Japanese economy and reconstruction, and it is also directly linked to the extra budget.” He supports increasing the sales tax to obtain additional revenue and wants to lower the corporate tax to encourage more foreign investment in Japan. On the issue of financing the FY2011 budget, Maehara indicated that before resigning PM Kan should gain opposition support for legislation allowing deficit-financing bond issuance. Maehara also supports an expansion of the BoJ’s asset purchase program to stimulate a recovery, saying the central bank “can expand its balance sheet a little more.” Maehara is a strong supporter of trade liberalization and strong US-ties. According to Michael J. Green, Japan Chair at CSIS, “Maehara had emerged as the most articulate champion of Japanese participation in the Trans Pacific Partnership (TPP) and was a key architect of Japan’s trilateral coordination with the United States and South Korea.”
Yoshito Sengoku, Deputy Chief Cabinet Secretary , 65
Sengoku is among a group of DPJ officials who have publicly called on PM Kan to resign. Formerly the Chief Cabinet Secretary, Sengoku was replaced by Yukio Edano during the January 2011 reshuffling of PM Kan’s cabinet. He supports raising Japan’s consumption tax saying in January 2011 that “The supporting fiscal conditions don’t allow for any delays [on raising the 5 percent sales tax.], it’s finally approaching the edge of a cliff.” Regarding Japan’s trade policy, Sengoku is supportive of Japan’s joining the Trans-Pacific Partnership (TPP) and has encouraged PM Kan to continue negotiations on the issue. On the issue of central bank independence, Sengoku has opposed establishing an inflation target for the BoJ.
Yukio Edano, Chief Cabinet Secretary, 47
Edano was thrust into the public spotlight following the March 11 earthquake and has been praised for his calm demeanor, work ethic and execution of duties as the government’s primary spokesman during the nuclear crisis. Edano has been elected to the House of Representatives six times since he entered politics in 1993. Edano also served as secretary-general of the DPJ. Regarding Japan’s fiscal policy, Edano supports fiscal reform and favors a consumption-tax increase to finance Japan’s rising social welfare costs.
Katsuya Okada, DPJ Secretary-General, 57
Okada is a former foreign minister and DPJ president who has mulled the idea of a coalition government following the resignation of PM Kan. Okada does not oppose the issuance of reconstruction-bonds but said that tax increases would be necessary to repay loans. Okada has also advocated reducing child allowance payments to improve Japan’s fiscal position.
Shinji Tarutoko, Chairman of the House of Representatives Fundamental National Policies Committee, 50
Tarutoko, who ran as the Ichiro Ozawa-backed candidate against PM Kan in May 2010, has expressed an interest in running for DPJ party president. In 2010, Tarutoko supported the DPJ party line opposing an increase in the consumption tax until after the next general election due by late 2013. Tarutoko is a graduate of economics from Osaka University and attended the Matsushita Institute of Government and Management, a school for political leaders policies that is considered very supportive of free-market principles.
Michihiko Kano, Minister of Agriculture, 69
Kano is a former LDP cabinet minister and has led aid and reconstruction efforts to northern Japan’s farming and fishing industries. He is considered more of a protectionist on trade issues and argues that liberalization reforms should take place only after Japan has recovered from the earthquake. On March 22, Kano announced a delay in developing plans to strengthen the farm sector to withstand foreign competition, a prerequisite to join the U.S.-supported the Trans-Pacific Partnership (TPP). Given his status as a veteran lawmaker without strong ties to any singly DPJ leader, Kano is seen as being able to reach out to the opposition-Liberal Democratic Party.
Sakihito Ozawa, Head of DPJ Tax Panel and Former Environment Minister, 57
Ozawa is the no. 2 in the DPJ and is leading the DPJ study on tax reforms. He opposes raising taxes to finance reconstruction efforts and favors increasing bond issuances. In April 2011, Ozawa said, “It’s wrong to immediately raise taxes from a macro- economic standpoint, and we should use government bonds. The Bank of Japan should buy bonds in purchase operations to raise cash.”
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