The administration of Prime Minister Yoshihiko Noda may argue that the draft budget for fiscal 2012 is below the target figure and the amount has fallen for the first time in many years.
But taxpayers should not be taken in by such arguments. Pork-barrel politics have undoubtedly swollen the proposed budget to a record size.
Many large public-works projects, from the start of three new Shinkansen bullet-train sections to the resumption of the construction of Yanba Dam, have been included.
Japan must reform its expenditures in line with its shrinking population. Why is the government proceeding with projects designed when the population was on the increase?
The government estimated that 19 trillion yen ($243 billion) would be needed over five years for rebuilding from the Great East Japan Earthquake. Most of the spending will be budgeted for the current fiscal year and the next.
For many projects, budget amounts have been inflated under the pretext that they are for post-quake reconstruction.
Many municipalities have already had difficulties spending all the funds earmarked for rebuilding projects.
The draft budget represents haphazard fiscal expansionism. We cannot see any rigorous fiscal discipline or any clear-cut policy initiative.
The Greek sovereign debt crisis has sent prices of government bonds falling sharply. The financial crisis has spread to Italy and Spain and is threatening Germany and France, leading members of the European Union.
How to bring government debt under stable control has become the greatest challenge for the global economy.
Japan is no stranger to such challenges. Public debt will soon exceed 1,000 trillion yen, or double the nation's gross domestic product. Based on this benchmark, Japan is in worse fiscal condition than Greece or Italy.
Overseas funds have several times sold Japanese government bonds to trigger a sell-off. But the attempts have been foiled due to demand backed by a wealth of individual financial assets in Japan.
But how will investors, scared by the sovereign debt crisis, react if Japanese government bonds come under a renewed attack now?
Financial industry officials are concerned that things might be different this time around.
The Noda administration plans to submit a bill to increase the consumption tax rate to the Diet during the ordinary session next year.
Until now, the credibility of Japanese government bonds has been narrowly maintained because the government still has much room for raising taxes.
Financial markets have been closely watching whether the Noda administration will be able to raise taxes.
If the government goes on a spending spree before its key policy undertaking, it will not be able to gain public support.
It is time the government shows an unwavering fiscal discipline to taxpayers.
The Noda administration may fail to increase the consumption tax rate, leading to a belief that any future Japanese government will not be able to raise taxes.
Should that happen, Japanese financial markets must be braced for a mauling.
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