Or the Yomiuri is on a roll. But more on that just a bit later.

Missing any fingers? Don’t fret, you can probably still count the legislative achievements of the Diet under the Fukuda administration on one hand.

An entire twice-extended extraordinary Diet session spent on the Maritime Self Defense Force’s refuelling mission in the Indian Ocean managed to address none of the important underlying questions and instead gave us nearly four months blown on an issue anyone unrelated to the sailors would have to squint really, really hard to see as mattering in any real way.

Prime Minister Fukuda’s first ordinary Diet session is shaping up, as many observers predicted, to offer not much more in terms of legislative achievement. Sure, the budget passed, but that was never really in doubt. That was never going to be a battle, it was never going to require political skill.

The gas tax was.

To recap: The DPJ-led opposition camp wrested control of the House of Councillors in the July 29th elections, leaving the LDP-led ruling coalition in control of only the House of Representatives for the first-time in its history. Not even the most optimistic of observers thought the LDP, accustomed as it was to running the country as the single party in a de facto near-single party state, to adjust to this new reality overnight and surely no one expected the LDP to smile at what could be the beginning of the end of the 1995 system (for real this time.) However, some naive observers (viz. Yours Truly) thought there was a pretty good chance that split control of the bicameral parliament would lead inexorably to greater actual debate and, as a result, improved transparency in the legislative process. Those same naive observers certainly thought that the LDP’s inevitable attempts to do an end-around on its newly-empowered rivals would certainly find no supporters. Who, after all, could blame an opposition party for opposing the ruling party? Who, when they really thought about it, wouldn’t see the ultimate benefit to the give and take of more genuinely multi-party politics?

Who indeed.

Fast forward a bit - a new LDP President, hence a new Prime Minister, is elected, his first Diet session is a none-too-fruitful slog - to today. The budget itself passed the LDP-controlled Lower House, the House of Representatives, which is all it needs to do; no difficulties there. After that, though, the ordinary Diet session of 2008 began, in its pace and accomplishment, to resemble the extraordinary Diet session of 2007.

At least now there are two things on the table - one bill, the gas tax, and one appointment, Governor of the Bank of Japan.

Last Fall, the DPJ sat on its haunches and waited for a bill it disliked to expire, then almost succeeded, once the Lower House re-passed it, in at least waiting out the sixty day reconsideration period after which the bill would automatically pass if the Upper House didn’t vote on it. As it happened, the DPJ, riven by more infighting than the famously fractious LDP, wound up voting on the bill in the Upper House in the eleventh hour, giving the LDP the chance to pass it, which didn’t change much. There are not many surprised in the Diet.

Same thing again. This time with the much more important gas tax.

To put it bluntly and too briefly, the 35-year-old temporary gas tax provided the cash for the approach of improving the country by paving it end to end that the LDP pursued unflinchingly from the time of Kakuei Tanaka to the time of Junichiro Koizumi, and may well be turning toward again as the good old boys of the powerful factions reassert control after the upset of the Koizumi years and the meandering of Shinzo Abe’s year at the helm. (For a better account of Tanakaism and the depth to which Japanese politics was buried in concrete for over three decades, read MTC’s “Tanakaism: The Final Days” here.)

In a nutshell, the DPJ wants the gas tax to be allowed to expire, or at the very least for the funds from the levy to go into general revenue. The LDP wants the tax to continue as is, with the funds remaining earmarked for road construction.

The gas tax is important as it constitutes a significant amount of government revenue. The idea of a gas tax, as an excise, is good. The higher price of gasoline has led to presumable reductions in consumption and has provided a market incentive for car manufacturers to produce more efficient vehicles. That Honda, Toyota, Nissan, et al. produce smaller, more fuel-efficient cars than their American counterparts is no accident.

The gas tax, as an issue, is important as its fate says a lot about the fate of other efforts to reform the country’s government. In practice, the gas tax is disastrous. It enables and funds ill-advised public works, the irreversible destruction of many, mainly rural, parts of the country, cements a culture of crippling dependency and fealty to the LDP in the local governments of many small towns and rural areas, and enables and funds the corruption, unaccountability, waste, and sclerosis that accompany the philosophy of progress through paving.

The gas tax is accompanied, in this Diet session, by an appointment, that of a new Governor of the Bank of Japan. Neither of these issues was at all a surprise. As soon as the gas tax was renewed in 1998, everyone knew it would expire on March 31, 2008. As soon as Toshihiko Fukui was appointed Governor of the Bank of Japan in 2003, everyone knew his term would end on Wednesday, March 19, 2008. Some astute observers predicted months ago that the gas tax would dominate the ordinary Diet session, other astute observers predicted ages ago that Toshiro Muto would be the first nominee for the BOJ Governorship and that it might not go smoothly.

The LDP, for all of Fukuda’s talk of compromise and consultation, has been intransigent, refusing to genuinely attempt to make any kind of deal with the opposition.

Yes, that’s right, the LDP has been stubborn.

From a tactical point of view, this is fine. The LDP gained its supermajority in the Diet through legitimate elections. Luckily for them, the voters handed their party dominance in the Diet in September 2005 and Article 59 of the Constitution grants them the means to use their supermajority in the Lower House to override the objections of the Upper House. This is legal, this is straightforward, this is fair.

That it apparently harms the LDP Government’s approval ratings is their problem and theirs alone.

This brings us to the press in general and the Yomiuri Shimbun (the Daily Yomiuri) in particular.

While some, such as Dr. Robert Angel of Japan Considered, have brought up objections to specific DPJ actions, such as reviving the “empty Diet” technique of not showing up for votes they’re bound to lose or forcibly removing microphones or papers in a vain attempt to delay passage, the line beaten to death by most of the DPJ’s detractors has been that the very fact of delays, the fact that the LDP doesn’t get what it wants right away, that parliamentary tactics and public feuds now play an actual role in legislation as more than mere window dressing represents some sort of crisis.

No one is more guilty of this than the Yomiuri. Over the past few weeks, the Yomiuri has treated us to a host of nutty, bad, and ugly editorials; it’s stance has been that the DPJ is irresponsible for acting based on (gasp!) political considerations, and that the resulting gridlock in the Diet represents some kind of crisis.

This is absurd. First, there are the general considerations. While both the ruling and opposition camps were duly elected, it is clear which side represents the wishes of the people. The LDP was handed a supermajority in an election that functioned as a referendum on then-Prime Minister Koizumi’s push for postal privatization. The LDP’s resounding victory represented a clear mandate from the public to pursue aggressive reforms of Japan’s massive, wasteful, and sometimes rotten institutions. No one voted for the vague fancies of Shinzo Abe and those who voted for the LDP in September 2005 were, it is safe to assume, voting against the very return of powerful factions and shoring up of the old ways pursued by those in control of the LDP under Yasuo Fukuda. The DPJ’s success on July 29, 2007 did not in any way overturn the sentiments of September 2005, it reinforced them. The people want reform. If those election results weren’t enough, the plunge of the Cabinet’s approval rating to under 25% drives the point home.

Behind the scenes compromises are fine, but they don’t count when the negotiations are between different factions of the same camp. Fukuda and the LDP have not reached out across the aisle, they have ignored the objections of the opposition, then presented them with series of fait accompli, pointing to DPJ intransigence when the opposition insists on acting as opposition.

The LDP agrees to convene a consultative panel including all parties only if the DPJ swears to start deliberations on the gas tax. That’s a phony compromise. Real compromise, real cooperation would have meant negotiating with the opposition from the start, regardless of what they do. The LDP nominates Toshiro Muto as BOJ Governor, the DPJ rejects him for having to close a relationship to the Ministry of Finance and, implicitly, for not having been consulted first. So the LDP nominates Koji Tanami, again a Finance Ministry bureaucrat, less qualified for the post than Muto, and again without consulting the DPJ. Who refused to budge there?

The Yomiuri has engaged in a Herculean effort to bend over backwards and misinterpret every available scrap of evidence in its attempts to place all of the blame for the current gridlock on the DPJ.

First, the Yomiuri has fantastical view of the worldwide importance of the Governor of the Bank of Japan. From an editorial last week:

The post of Bank of Japan governor has fallen vacant for the first time in the postwar era. The deterioration in the functions of the nation’s political system, which brought about this disturbing situation, cannot be tolerated.

The world’s financial markets are staring down the barrel of a crisis. A new central bank chief must be appointed without further delay.

Why? Because the Bank of Japan is going to single-handedly solve the problem? Because the BOJ has such a strong recent track record of spurring massive economic growth?

And, as I harped on about above, how does meeting political maneuvering with political maneuvering, delaying the passage of the LDP’s wish list into law, signal the “deterioration in the functions of the nation’s political system”? Couldn’t this also be called the give and take of multi-party democracy?

To quote my colleague Ken Worsley, on Japan Economy News (quoting another Yomiuri piece):

One task expected of the Bank of Japan head is to monitor the global financial market situation during the United States’ long night, and until Europe welcomes the morning. And, if necessary, the governor should spearhead emergency measures.

This is again absurd. The BOJ is not going to somehow transform from near irrelevance to the world’s central banking superpower simply because the US needs a pinch runner. The Bank of Japan has no emergency measures at its disposal - it can only lower interest rates by 0.5% before they would enter negative territory (hey, why not?). There has been talk of lowering the rate by 0.25% at April’s Policy Board meeting. Still, this would hardly qualify as an emergency measure; it would simply be a matter of course.

It gets better:

In a sense, the Bank of Japan governor can be dubbed the “duty officer” of the global economy.

Says who? I have a very hard time taking that statement seriously at all.

What’s more is that these comments, and the crisis the paper is shouting from the rooftops, show that the editors of the Yomiuri see something mystical in the official title “Governor of the Bank of Japan.”

From last week:

. . . Masaaki Shirakawa, a Kyoto University professor who has been endorsed by the House of Representatives and the upper house to become a deputy governor, is expected to become the acting Bank of Japan chief until a new governor is appointed.
. . . Can Shirakawa, as acting governor, implement bold and urgent policies in the heat of a financial system emergency, for instance?

I forgot. The financiers of the world had such enormous confidence in Toshihiko Fukui. Is Shirakawa unqualified? Is he some type of demihuman? The implication here is clearly that a deputy governor is a different class of person than a governor. As of today, Shirakawa has more experience in the job than any other candidate. Does that make him better?

The man’s a professional. Maybe not the best man for the job, but he’ll be able to cut rates by 0.25%. He’ll be able to make sound decisions.

The Yomiuri asks whom the DPJ would like to see in the job, very much in the “if you’re a music critic, let’s see you outplay Yo-Yo Ma” vein. What’s funny, though, is that this is precisely the problem. Had the LDP taken such a step, this “mess” would not be at all the same.

From two weeks ago:

. . .[A] deputy governor cannot be expected to carry weight comparable to that of the governor in fulfilling his duties. This would exacerbate uncertainties about Japan’s monetary policy and stir up anxieties that could lower the market’s confidence in the economy.

Japan’s failure to get its important personnel affairs in order also would arouse distrust among other countries of the nation’s political process.

Again, why? Other countries have appointees rejected. Other countries have politics. What might also arouse distrust among other countries is seeing Hidenao Nakagawa go into BOJ meetings, then depart shortly before decisions are announced that coincide with what the LDP thought was best all along.

And this brings us to the Yomiuri’s bizarre and flawed view of American politics.

The DPJ rejected Muto’s appointment as the Bank of Japan governor, saying that the central bank would not be able to maintain its independence if Muto, a former Finance Ministry bureaucrat, assumes the central bank’s top position. The party’s assertion is, however, unconvincing.
Former U.S. Federal Reserve Board Chairman Paul Volcker pushed ahead with a tight monetary policy while regularly clashing with the government, earning himself the nickname “inflation fighter” in the process. He also served as a deputy treasury undersecretary.
This suggests the DPJ’s reasoning for opposing Muto’s appointment due to his career background as a former Finance Ministry bureaucrat does not quite stack up.

Paul Volcker was the deputy undersecretary of the Treasury for a few years. (He actually later became an undersecretary and was later President of the federal reserve Bank of New York.) This is not at all the same thing as being a career bureaucrat in Japan’s Ministry of Finance. “Despite” his having held such a job, he became the “inflation fighter.”

What does this have to do with Japan now? When was the last time inflation was a big problem for Japan? At the same time rampant malnutrition was a big problem? Before the yen was pegged to the dollar at 360?

There is no parallel. Not only do Volcker and Muto’s resumes not match up, Volcker’s confirmation as Fed chief was not dogged by fears of his being unwilling to clash with his former colleagues. No one was worried about DNC Chairman John C. White walking into the Fed and telling Volcker what to do.

Beyond that, what is the Yomiuri’s fascination with nicknames? We were treated to the assertion that Haruo Maekawa was a great governor because he was called “Mike” last week.

Yesterday, the Yomiuri gave us the piece de resistance in an editorial by Koichi Akaza, one-time Washington correspondent for the paper. In it, Akaza tries to draw a parallel between the downfall of the American Neocons, aka the Republican Revolution, and the fate of the DPJ. Let’s take a look.

Republicans came into fierce conflict with the Clinton administration over the federal budget, resulting in a political deadlock that failed to approve a temporary budget.
Functions of government organizations shut down as a result.

Yep. Nonessential government organizations shut down twice, for a grand total of 25 days, most of which fell in the last half of December 1995 and the first week of January 1996, when many federal employees would have been on vacation anyway.

I had believed that the complete separation of the powers of administration, legislature and judiciary was a weak point of the U.S. political system as it led to the suspension of government functions when the president and Congress locked horns over issues.

I also had thought that such an impasse would never occur in Japan, which has a parliamentary cabinet system.

However, more than 10 years later, a similar serious political situation has emerged in Japan.

Beyond the widespread, but asinine idea that slowing down the pork-doling and political point-scoring of either the Diet or the US Congress is a bad thing, Akaza is equating not having an official Governor of the Bank of Japan with a shutdown of the government.

Nope. Not by a long shot. The 1995 Federal Government shutdown in the US occurred because the budget wasn’t passed as Bill Clinton opposed Republican spending initiatives and cuts to social services and Congressional Republicans insisted on budget cuts (but didn’t want to give up all the pork.) That is in no way similar to the current situation in the Diet.

The BOJ has an acting Governor. He was just approved by the Diet. The budget has already been passed. There is no risk of any kind of government shutdown in Japan, it is not even a potentiality in an extreme case.

Akaza goes on:

The confusion caused by Republicans’ confrontation with the Clinton administration led to a rapid plunge in support for Republicans.

Eligible voters, who were hit by the economic slump, vented their anger at the Clinton administration by giving powers to Republicans in the midterm election, but instead of using their newfound powers to improve people’s livelihood, Republicans were obsessed with a power struggle, causing political confusion as a result.

Against this backdrop, a sense of disappointment spread among voters.

Yeah, so much disappointment that the GOP only held on to Congress for another decade, won back the Presidency and got one of America’s most controversial presidents reelected. Man, the voters hated the Republicans.

Clinton, who was said to have no chance of winning a second term, was reelected with a resounding victory over Republican candidate Bob Dole.

Who said that? Bill Clinton, the incumbent President running for reelection in a year of good economic growth, ran against Bob Dole. If you think the 1996 US Presidential election requires any more explanation than that, you really weren’t paying attention.

The U.S. case offers a precious lesson to the current DPJ.

Yes, and that lesson is: When you find yourself in a not at all analogous situation, do the exact opposite of whatever the Yomiuri correspondent thinks is wise and you’ll control the legislature for over ten years and get eight years of executive power while, at the same time, your country has a period of solid economic growth and the possibility of a budget surplus for the first time since the 1950s.

It will be held accountable for political confusion for taking a confrontational approach toward the government. . .

. . . by the Yomiuri. Meanwhile the government’s approval ratings will head to Mori-land.

At a meeting with Fukuda, who is also president of the Liberal Democratic Party, in November, DPJ leader Ichiro Ozawa agreed to form a grand coalition with the LDP because he apparently had taken such difficulties into consideration.

However, since Ozawa gave up on the idea of forming a grand coalition after strong opposition from DPJ lawmakers, the DPJ has gone over the top in dealing with Diet business.

Ozawa is the symbol of the DPJ’s responsible streak? If not Ozawa’s walking out of votes, Ozawa’s refusal to vote on bills, or Ozawa’s theatrics, what were the DPJ’s over the top actions?

Besides, the people voted for reform in September 2005; they voted for reform again in July 2007. A grand coalition making it easier for the LDP to function as though, again, it faced no opposition and making it easier for the LDP to push through the status quo, ensuring nothing was changed, would have been in no one’s interests but the LDP’s.

Akaza then goes on in the hyperbolic Yomiuri vein - talking of Diet business having ground to a halt (it hasn’t) and “political confusion,” which, as far as I can tell, is a euphemism for trying to slow down the business of rotten government agencies.

I’ve spent enough time on the lack of a BOJ Governor (it’s not a vacancy, Shirakawa’s there), so I’ll approach the end with a look at the imminent doom the DPJ is bringing down on Japan by not approving the gas tax.

The main effect will be that gas prices will fall by about 25 yen per liter, thus depriving the government of tax revenue. What will that hold up?

Nothing. Well, nothing worthwhile anyway. The gas tax revenue is earmarked for road construction, which is about the last thing Japan, with declining car sales, a declining population, increasing urbanization, an air pollution problem, and beautiful, unused mutli-lane highways on remote mountainsides needs.

The DPJ has said they’d consider an extension of the gas tax if the funds collected were made part of general revenue.

General revenue doesn’t line pockets as well as road revenue does, though.

So, one last Yomiuri editorial, this one also from yesterday.

As a counterproposal to the government-sponsored bills that have been approved by the House of Representatives, the DPJ submitted bills stating that the provisional gasoline tax rate will be scrapped as of the end of March and that the terms of other special tax measures will be extended in accordance with the government-sponsored bills.

That part is important. It belies everything the author goes on to say in the second half of his piece, the part called “Political Posturing.”

If the Special Taxation Measures Law expires, the ramifications would be tremendous.
A tax-free measure on naphtha, a petroleum product. . . would be scrapped, leading to price increases for many plastic products.

So lower gasoline prices and the loss of tax revenue earmarked for unnecessary expenditures would be a disaster, but the gain of tax revenue from a different petroleum product, revenue that would be in the general fund, is also a disaster.
In Japan’s major cities, most things that aren’t paved are double-wrapped in plastic, so more expensive plastic, on the surface doesn’t seem like such a bad thing. Besides, businesses and individuals will be saving on gas.

The tax-free ceiling of the automobile acquisition tax would be lowered from the current 500,000 yen to 150,000 yen. The number of used car buyers required to pay this type of tax would skyrocket.

From an environmental standpoint, gas taxes and car registration could work hand in hand. Is the tax enough that it’s going to stop people from buying cars? How many cars go for less than half a million yen? Enough to have a big economic impact?

[T]he measure to levy no tax on interest earned on the 24 trillion yen foreign financial institutions have deposited in Japanese banks would be terminated. A massive chunk of these funds could be quickly pulled from Japan if this measure is rescinded.

The measure to reduce or exempt tax when registering real estate holdings also would be abolished. If this happens, a person who purchases a 50 million yen condominium, for instance, will have to cough up more than 100,000 yen in additional tax payments.

I’ll give him those two. Those are bad. But if foreign investors don’t pull their money out of Japanese banks, there could be a tax windfall and the benefit to the country of an end to Tanakaism far outweighs the harm done by the loss in bank deposits or higher real estate registration taxes.

The key, though, is that the DPJ has proposed to approve all of those measures if the gas tax is allowed to die. They’re holding off on voting on such proposals now because the Government has already said it would pull out Article 59 again, resubmit the bills, and pass them if the Upper House votes them down.

So, again, who’s holding things up?