Japan's Ultra-Powerful Bureaucrats Undergo Webcast Public Exposure

May 6, 2010Japanby EW News Desk Team

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Seeking to bring its spiraling debt under control, Japan has undertaken an unlikely exercise:

lawmakers are forcing bureaucrats to defend their budgets at public hearings and are slashing wanton spending.

Seeking to bring its spiraling debt under control, Japan has undertaken an unlikely exercise:

lawmakers are forcing bureaucrats to defend their budgets at public hearings and are slashing wanton spending.

The hearings, streamed live on the Internet, are part of an effort by the eight-month-old government of Prime Minister Yukio Hatoyama to tackle the country’s public debt,

which has mushroomed to twice the size of Japan’s $5 trillion economy after years of profligate spending.

Greece’s debt crisis, which has panicked investors and forced the rest of Europe to put together a multibillion-dollar bailout,

has fed fears in Tokyo that if spending is unchecked, Japan could become the center of the next global financial crisis.

Mr. Hatoyama and his ruling Democratic Party are also trying to wrest control of Japan’s economy from the country’s powerful bureaucracy.

“We want the public to see how their tax money is really being spent,” said Yukio Edano, the state minister in charge of administrative reform, who is heading the effort. “Then we will bring about big changes.”

The target of the most recent hearings is Japan’s web of quasi-government agencies and public corporations —

nonprofits that draw some 3.4 trillion yen ($36 billion) in annual public funds, but operate with little public scrutiny.

Critics have long argued that these organizations, many of which offer cushy executive jobs to retired public officials,

epitomize the wasteful spending that has driven Japan’s public debt to dangerous levels, according to this article in the New York Times.

The daily testimony by cowering bureaucrats, covered extensively in local media, has given the Japanese their first-ever detailed look at state spending.

So far, viewers have looked on in disbelief over the apparent absurdity of some of the government spending. ...

“Budgets have always been drafted behind closed doors, with nothing to underpin how much should be spent or why,”

said Hideo Fukui, a professor of law and economics at the National Graduate Institute for Policy Studies in Tokyo.

“Until now, nobody knew how unscrupulous the spending was.”

Many analysts say that Japan must slash wasteful spending and start cutting its public debt to avert the interest rate and refinancing risks that have wreaked havoc in Greece.

Japan’s government debt reached 201 percent of its gross domestic product by the end of 2009, Fitch Ratings said in a recent report — by far the highest among industrialized countries.

Much of that government debt is held publicly and financed by the country’s once-ample private savings.

But a slow drop in the savings rate has raised fears about the long-run sustainability of public finances, especially given the country’s lackluster economic outlook, the Fitch report said.

Addressing Japan’s debt crisis was among the many promises made by Mr. Hatoyama,

who swept to power in August when voters tossed out the Liberal Democratic Party after half a century of almost uninterrupted single-party rule.

Mr. Hatoyama’s Democratic Party has also been keen to find extra money to pay for an ambitious social agenda,

including cash payments to families with small children and free public high school education.

The public interest in the budget hearings has been among the few bright spots for Mr. Hatoyama,

whose poll ratings slumped after political financing scandals, and a fight over moving an American military base.

At the central Tokyo site for the hearings, people lined up to watch the bureaucrats being pressed before panels of lawmakers and appointed experts.

“The bureaucrats looked scared,” said one attendee, Kenji Nakao, a 67-year-old Tokyo retiree. “It was very satisfying to see.”

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