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if they don't reduce spending you're screwed, if they reduce spending they're screwed, in short they are screwed.
Japan's Proposed Budget Strains to Curb Debt, Spur Growth
TOKYOThe hard-pressed administration of Japanese Prime Minister Naoto Kan has unveiled its budget for the fiscal year starting in April, narrowly abiding pledges to limit spending and borrowing, but winning few plaudits from analysts who said it wouldn't make much headway in solving long-term fiscal problems or spurring growth.
Such is the dire state of Japan's fiscal situation that the budget announced Friday, totaling 92.4 trillion yen ($1.11 trillion), continues to rely more heavily on revenue from new bonds, projected at 44.3 trillion yen, than on all tax receipts, estimated at 40.9 trillion yen. The remainder comes from one-off funding from various government accounts and other nontax revenues.
Mr. Kan has pledged to limit core spending and debt issuance to this year's levels to show his administration is tackling Japan's debt problem. Japan's public debt has swelled to roughly twice its annual economic output as a result of nearly two decades of economic stagnation and numerous fiscal stimulus packages.
"You can hardly call tax revenue of 41 trillion yen and the borrowing of 44 trillion yen a stable fiscal policy," said Masayuki Suzuki, economist at Dai-ichi Life Research Institute. "The government has to either cut its spending or increase its revenue, or both."
Getting a grip on the debt has proven to be tough. Because of larger debt-servicing costs and social-security payments, the planned total spending is the largest on record, topping the previous record of 92.3 trillion yen in the current fiscal year's budget.
Efforts to cut expenditures have met stiff resistance. The export-dependent economy is dogged by deflation and a strong yen, making it vulnerable to another slump if spending is reduced too sharply.
"The economy is currently at a standstill," Finance Minister Yoshihiko Noda said. "It was certainly necessary for us not to focus only on fiscal rehabilitation, but also focus on projects that could help overcome deflation and generate growth."
Japan's Proposed Budget Strains to Limit Debt, Spur Growth - WSJ.com
Japan's Proposed Budget Strains to Curb Debt, Spur Growth
TOKYOThe hard-pressed administration of Japanese Prime Minister Naoto Kan has unveiled its budget for the fiscal year starting in April, narrowly abiding pledges to limit spending and borrowing, but winning few plaudits from analysts who said it wouldn't make much headway in solving long-term fiscal problems or spurring growth.
Such is the dire state of Japan's fiscal situation that the budget announced Friday, totaling 92.4 trillion yen ($1.11 trillion), continues to rely more heavily on revenue from new bonds, projected at 44.3 trillion yen, than on all tax receipts, estimated at 40.9 trillion yen. The remainder comes from one-off funding from various government accounts and other nontax revenues.
Mr. Kan has pledged to limit core spending and debt issuance to this year's levels to show his administration is tackling Japan's debt problem. Japan's public debt has swelled to roughly twice its annual economic output as a result of nearly two decades of economic stagnation and numerous fiscal stimulus packages.
"You can hardly call tax revenue of 41 trillion yen and the borrowing of 44 trillion yen a stable fiscal policy," said Masayuki Suzuki, economist at Dai-ichi Life Research Institute. "The government has to either cut its spending or increase its revenue, or both."
Getting a grip on the debt has proven to be tough. Because of larger debt-servicing costs and social-security payments, the planned total spending is the largest on record, topping the previous record of 92.3 trillion yen in the current fiscal year's budget.
Efforts to cut expenditures have met stiff resistance. The export-dependent economy is dogged by deflation and a strong yen, making it vulnerable to another slump if spending is reduced too sharply.
"The economy is currently at a standstill," Finance Minister Yoshihiko Noda said. "It was certainly necessary for us not to focus only on fiscal rehabilitation, but also focus on projects that could help overcome deflation and generate growth."
Japan's Proposed Budget Strains to Limit Debt, Spur Growth - WSJ.com