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Wednesday, April 1, 2009

Aso orders new stimulus, extra budget

Timing of general election could hinge on DPJ's reaction to move


Staff writer

Prime Minister Taro Aso ordered the government Tuesday to come up with a new set of economic measures, including the drafting of an extra budget, aimed at digging the economy out of recession.

Aso added that he may call an election before the enactment of the extra budget for fiscal 2009, depending on how the Democratic Party of Japan responds.

If the DPJ "refuses to approve the extra budget, I will make a decision depending on the situation at that time on whether to wait 60 days and make sure it is enacted or end the discussion and call for an election by presenting the extra budget as our proposal," Aso said.

The Lower House, where the Liberal Democratic Party-New Komeito bloc enjoys a majority, can override an Upper House rejection of the budget after 60 days.

Speaking at a news conference, Aso said that further economic steps are necessary to prevent the economy from hitting new lows, to secure employment to ease public anxiety and to invest in new fields so the economy can grow.

"I believe that people are demanding the mobilization of finances from the government," Aso said. "I will not be a slave to past circumstances and will do my best using bold ideas."

The package to come includes supporting the use of technology to increase solar power generation and production of environmentally friendly cars as well as promoting the country's strengths in "soft power" areas, such as animation, fashion and J-pop, to boost international business.

Aso added that it is necessary to look into cutting the inheritance and gift taxes to encourage the elderly to pass their assets on to their children before they die and stimulate consumption.

The scale of the package has not been decided yet, Aso said, but some in the ruling bloc have said more than ¥10 trillion will be necessary.

Aso's call for additional economic measures came just before his departure for the two-day Group of 20 financial summit this week in London. There, he is expected to introduce Japan's latest economic measures as well as stepsto aid developing countries, hoping to demonstrate tothe international community that Japan is taking action to overcome the recession.

The added steps are also an attempt to attract public support for the Aso Cabinet, which until recently has steadily been losing popularity since its inauguration last September.

Political analysts, however, called the added economic measures, including the drafting of an extra budget, only a "life-support system" keeping Aso in power.

Some political insiders expect Aso to wait at least until the extra budget passes the Diet before dissolving the Lower House. Many in the LDP have begun urging Aso to dissolve the Lower House and call a snap election once the extra budget is enacted.

"As I have repeatedly said, I am prioritizing economic measures over politics," Aso stressed. "I will decide when to dissolve the Lower House at an appropriate time."

Only last week the support rate for Aso and his Cabinet showed signs of recovery thanks to the political funding scandal that resulted in the arrest and indictment of DPJ President Ichiro Ozawa's chief secretary.

But critics speculate that the improvement is only temporary and that the support rate will drop again when the commotion over Ozawa and the DPJ fades.

The government is expected to submit the extra budget for fiscal 2009 with the economic measures before the end of the month for enactment by the close of the current ordinary Diet session on June 3.


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