Ruling Coalition Partners Wrangle Over COVID-19 Cash Handouts

Politics

The government has adopted a plan to give every Japanese resident ¥100,000 in response to the COVID-19 pandemic, ditching its original proposal of a limited handout of ¥300,000 to households whose incomes have dropped. Underlying the change was the unprecedented hardline stance adopted by Kōmeitō, the coalition partner of the ruling Liberal Democratic Party. The move may portend a shift in the balance of coalition power.

A Sudden Shift to a ¥100,000 Handout

On the evening of April 16, at his official residence, Prime Minister Abe Shinzō announced the nationwide expansion of the state of emergency declared on April 7 for seven prefectures on the basis of a special measures law. In his announcement, the prime minister went on to explain a new emergency economic measure accompanying the declaration: a payment of ¥100,000 to every resident of Japan.

This idea of a ¥100,000 handout to each person in the country, however, differed from the cabinet decision already made on April 7 to provide cash payments of ¥300,000 on a more limited basis, to households whose incomes have dropped as a result of the COVID-19 outbreak. And the supplementary budget plan to implement that measure had already reached its final stage.

What caused the government to shift its focus from “households with diminished incomes” to “every resident of Japan” for the cash handouts that are the centerpiece of its emergency economic measures? The answer lies behind the scenes, in a power struggle that unfolded between the Liberal Democratic Party and its coalition partner Kōmeitō, with the leading roles played by Prime Minister Abe, LDP Secretary-General Nikai Toshihiro, LDP Policy Research Council head Kishida Fumio, and Kōmeitō leader Yamaguchi Natsuo.

LDP President Abe Shinzō (left) and Kōmeitō leader Yamaguchi Natsuo.
LDP President Abe Shinzō (left) and Kōmeitō leader Yamaguchi Natsuo.

Sudden Announcement Opens the Conflict

Everything began in the evening on April 14, two days before the prime minister announced the ¥100,000 handouts. At an emergency press conference that he convened, the LDP’s Nikai threw out the following proposal:

“There are desperate calls for a cash payment of ¥100,000 as an economic measure. I want for the LDP to fulfill its responsibility by implementing this measure as speedily as possible.”

This was an abrupt change in the government’s plan, adding a ¥100,000 payment to every resident in addition to the ¥300,000 payment to households in need. Nikai explained the policy as needed “to bring comfort to the public” in the face of the heavy blow delivered to the Japanese economy and household finances by the COVID-19 pandemic.

A government source noted that the background to the shift was “frustration among younger LDP politicians with the 300,000-yen payment policy. Some within the government also felt it would be more straightforward and speedier to go with a uniform payment.” An LDP official observed that the new policy would also “enhance the party’s presence.”

But some thought that Nikai’s statement was issued before everyone was on board with the plan. Some within the LDP said they had not even heard of the idea before and expressed concerns about proposing an additional cash handout before finalizing the supplemental budget. Even officials in the Prime Minister’s Office tasked with economic policy have said that they first learned of the proposal through Nikai’s press conference. The decision seems to have been one that Nikai made on his own.

LDP Secretary-General Nikai Toshihiro
LDP Secretary-General Nikai Toshihiro

Kōmeitō Outraged at Being “Out of the Loop”

The announcement shocked members of the junior coalition partner. In March, Kōmeitō had already proposed the idea of a ¥100,000 handout for each resident of Japan in response to the economic distress caused by the pandemic. But the government ended up announcing ¥300,000 payments to households facing an income drop, following a meeting on April 3 between Kishida, head of the LDP’s powerful Policy Research Council, and the prime minister.

Some observers felt that Abe was setting the scene nicely for Kishida, considered a likely successor to the premiership, with his decision to increase the handout to ¥300,000 amid media reports on the morning of the same day about limited payments of ¥200,000 per eligible household.

LDP Policy Research Council head Kishida Fumio.
LDP Policy Research Council head Kishida Fumio.

There was unease within Kōmeitō, meanwhile, whose own proposal had been rebuffed. Its members objected to the LDP policy for reasons including the difficulty of establishing criteria for the handout and the feeling that the measure did not meet public expectations. On top of this, the Kōmeitō leadership objected to being “out of the loop,” completely left out of the decision-making process, and these leaders were hearing complaints among the rank-and-file about the party’s lack of presence.

Just around the time the Kōmeitō leadership was managing, somehow, to get the party to back the limited ¥300,000 handouts as a ruling coalition member, Nikai tossed out the idea of ¥100,000 payments for everyone.

Since Kōmeitō had proposed the same policy earlier and seen it rejected, the frustration inside the party suddenly erupted. In the eyes of party members, it seemed that the LDP was trying to take credit for an idea it had stamped out earlier. In order to quell the dissatisfaction within its own ranks, Kōmeitō felt the need to exert pressure on their own to have the ¥100,000 handouts immediately implemented.

Yamaguchi Delivers a Point-blank Demand

On the morning of April 15, the day after Nikai’s press conference, Yamaguchi rushed to the Kantei for a conference with the prime minister. Following the discussion, Yamaguchi announced that he had pressed Abe to implement a uniform ¥100,000 handout, adding that the government “should deliver a message of encouragement and solidarity to the people.”

In response, Prime Minister Abe expressed a certain understanding, saying that such a step would be considered. Yamaguchi, for his part, emphasized that he had “pressed the prime minister to make the decision” and had come away with the meeting “with the understanding that the proposal had been positively accepted.”

Additionally, with regard to the comments Nikai had made at his press conference, Yamaguchi said that he had “not heard what intentions Nikai had in mind in making his remarks,” and stated with regard to the payment proposal that “Kōmeitō had made its own independent request to the prime minister today.” In this way, Yamaguchi emphasized that Kōmeitō was making its own proposal that had nothing to do with Nikai’s comments.

The Specter of a Coalition Split

Following the talks, an emergency meeting was held in the Diet building with the secretary-generals and policy research council heads of the LDP and Kōmeitō. This meant that Nikai and Kishida from the LDP were present. The topics on the agenda were the timing of the uniform ¥100,000 payment and the conditions for the ¥300,000 payment to households with reduced income.

Kōmeitō, emphasizing the need for speedy action, insisted on the need to scrap the ¥300,000 per household payment plan and quickly implement a uniform ¥100,000 per individual handout, and argued that the supplemental budget proposal should be rearranged. In response, the LDP insisted that the ¥300,000 payments for reduced-income households backed by Kishida could not be abandoned. The senior coalition partner suggested that the ¥100,000 for each individual could be implemented as an additional measure after the household payments. In other words, although the LDP did not reject the individual payments, it wanted to prioritize the assistance to households with reduced incomes that had already been agreed on.

With the two sides at loggerheads, the talks carried on intermittently for over four hours. When the meeting ended, the Kōmeitō leaders exited the room quickly, while there was still no sign of the LDP leadership. Just as some of the onlookers, judging from the scene, began murmuring about a split in the ruling coalition, Kishida appeared in front of the reporters and made the following statement:

“Since a conclusion was not reached through the discussions, we will continue to make preparations for the supplemental budget. That’s all for today.”

Although his comments suggested that talks would continue, the fact that budget talks continued implied that the LDP intended to follow through on its original idea of targeting households for payments, rather than responding to the Kōmeitō proposal. Voices of relief were expressed by some LDP officials that Kishida had managed somehow to maintain the party’s position. But the LDP had far underestimated Kōmeitō’s resolve.

Supplemental Budget Revised

By the next day, April 16, the situation had completely changed—again under the impetus of Yamaguchi. He phoned Prime Minister Abe to insist that a political decision had to be made. Yamaguchi conveyed his strong determination, telling the prime minister that unless the ¥100,000 plan was implemented immediately, his party could not back the supplemental budget. For Kōmeitō, as one of the ruling parties, to withhold budget support would have shaken the coalition at its foundation. In response, Abe said he would consider the proposal and proceeded to hold a series of meetings at the Kantei, consulting first with Minister of Finance Asō Tarō, and then with Nikai, Kishida, and others.

Asō was firmly opposed to the Kōmeitō idea, pointing out—from his own experience as prime minister, when the government issued a flat-rate handout in response to the 2008 financial crisis—that the “money went into people’s savings and had little economic benefit.” But Asō said he would accept a revised supplemental budget if that was the decision of the party.

Nikai and Kishida spoke to reporters together after their meeting with Abe. Wearing a stern expression, Kishida made the following brief statement: “The prime minister instructed us to continue working to reach an agreement.”

Soon afterward, the prime minister issued instructions to “rearrange the supplemental budget” to accommodate the ¥100,000 payments. That evening he informed Yamaguchi that the payments would be made with “no income restrictions,” marking the moment for the prime minister to reverse his decision and completely give in to the Kōmeitō demand.

Infighting at a Critical Moment

This fierce battle within the ruling coalition over cash payments, sparked by a comment made by the LDP secretary-general, progressed all the way to point of the Kōmeitō leader issuing a point-blank demand that forced the prime minister to back down. One LDP official, reviewing this unusual train of events, said that Kōmeitō’s persistence over the ¥100,000 payouts conveyed the feeling that they were willing to make good on their threat.

One person involved observed, almost with a sigh, that “it’s regrettable for people on the same side to argue at a time like this.” The current administration has gripped the reins of power and held firmly to its policy course since Abe became prime minister (for the second time) in 2012. But now it seems that the balance of power within the ruling coalition could be shifting.

With Japan facing the unprecedented crisis posed by the COVID-19 pandemic, some are wondering whether the backroom dealing leading up to the decision on uniform cash handouts was really in the interest of the people. The ruling parties will need to explain more clearly the rationale behind paying each resident ¥100,000 to dispel the notion that the decision might have had more to do with politics than policy.

(Originally published in Japanese on FNN’s Prime Online on April 21, 2020. Written by the Fuji TV Political Department. Translated and edited by Nippon.com.)

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