Is this the End for Yoshihiko Noda?

57 against. 16 no shows or abstentions. This has made things somewhat more difficult for the Noda administration.

As explained the dilemma will now be that the application of strict penalties could lead to the DPJ losing its lower house majority and make it vulnerable to losing a no-confidence vote, while a soft application of penalties could be used by Noda’s political enemies in other parties against him in political posturing.

Ultimately Noda and the senior leadership should come down on the side of softer/delayed penalties. While the LDP in particular will try and herd Noda into undermining his own government by taking a hard line, it will be a dangerous game for the LDP to play out too publicly. If the LDP president Tanigaki plays games in the upper house around the tax/social security bills trying to force Noda to cut loose Ozawa and the 57, it may help him achieve his goal of forcing an early election but it will not do the LDP any favours in that election.   Tanigaki and the LDP voting against the tax bills on the basis of another party’s internal affairs will be too much for most to stomach – particularly because they themselves have argued the reforms are necessary for Japan’s fiscal future and have already voted in favour of them once. I suspect the DPJ will figure that out in due course and in the mean time will try to drag out the punishment process as long as possible.  I would expect the bills to pass the upper house in September as planned.

On the issue of a supplementary budget or other legislation however then it may be another matter. While Noda was able to successfully maneuver the LDP into voting for the tax bills without having  to give up his trump negotiating card, a negotiated election set for after the next LDP and DPJ party elections in September may well  be the pound of flesh extracted for any further cooperation on legislation. Komeito has expressed a preference for an election in the second half of this year as well.

If Noda can make it until August however without too much political damage then there may be another factor he could exploit – that of what could turn out to be desperate maneuvering for the role of LDP president. We may see all sorts of actors come out of the woodwork due to the, perhaps dubious, assumption that the next LDP president will be Japan’s next prime minister. In reality no one in the LDP wants to see Tanigaki succeed, and LDP hopefuls will want to be the ones to take credit for bringing down the DPJ government.

On the DPJ leader elections, under normal circumstances it is difficult to imagine the September DPJ election going against Noda unless he handles things badly in the next two months- the most likely candidates  have been prominently co-opted into either the consumption tax process (Maehara and Okada) or the restarting of Japan’s nuclear reactors (Edano or perhaps as an outside “election face,” Hosono). The one extenuating factor in this case is that the next DPJ election will allow DPJ party executives, regional politicians, and paid-up DPJ members to vote, which could be exploited by someone running a more populist campaign.

The other thing to watch for is the election reform bill. While the fuss over the tax bill was being played out the DPJ submitted to the relevant parliamentary committee its bill which it is hoping will eventually be backed by the Komeito. The DPJ has said that it is going to go ahead with a vote on the bill one way or another, so unless the Komeito party reacts strongly against it the LDP will also have another difficult choice to make – go against the bill but risk ‘splitting’ the LDP-Komeito relationship of convenience (some in the Komeito have come and said that the DPJ bill would lessen the incentives for the Komeito to cooperate with the LDP in the next election) or go along with a bill the party does not like. Noda may be able to use  this bill as leverage to fend off LDP demands on other bills.

Finally it seems that Hashimoto is on the move again – and his timing was good – perhaps too good. Just  a few days before the tax/social security bills passed the lower house Hashimoto came out all guns blazing against the betrayal of “manifesto politics.” He argued that, given the original DPJ pledge not to raise the consumption tax for at least four years, the DPJ was in passing the tax bill taking the concept of pragmatism far too far, and that actions such as the DPJ’s are the reason that Japanese do not have trust in the public. He makes a good case that will be hard to deny. Of course for Hashimoto the timing was good because the bills were a fait accompli. Hashimoto has in the past been reluctant to state his explicit view on the consumption tax rise, saying that a reorganization of the Japanese administrative structure would be required before making such a decision. He was over the last few days very careful in his words to not attack the consumption tax rise directly but rather the DPJ’s style of politics around it. The reality is that the DPJ seems to ahve done the dirty work for more populist parties campaigning on the basis of fiscal and administrative reform. That the DPJ has brought the LDP along with them is all the better. It is very unlikely that any party is going to roll back the consumption tax rise if it claims power. Even if such a party(s) was earnest in its attempt to cut spending and weed out waste in the political and bureaucratic system, there will still be a hole. This will help them reduce this somewhat and may make it easier for them to keep a hold on power. That may be the important long-term consequence of Noda’s success, even if in the short-term it has made things considerably more difficult for the DPJ and himself. 

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