The general election is set for February 8. Prime Minister Takaichi has framed this as a referendum on “Responsible Fiscal Expansion.” Conservative media circles suggest that since most parties are now calling for consumption tax cuts, the real battle lies in immigration or relations with China. I find this view dangerously naive.
The real question is: Does a party truly want to cut the consumption tax from a structural conviction, or is it just a temporary election ploy? We must never repeat the nightmare of the Kishida administration. Unless the economy becomes structurally strong, our diplomacy and national security will remain fragile.
To clarify the stakes, I have classified the political players into five categories based on their stance on fiscal expansion. The further down the list, the stronger their bias toward tax hikes and social security cuts.
1. The “Currency Issuance” School (MMT Alignment)
This group understands that the government can create money. The Democratic Party for the People (DPP) likely falls here, given leader Tamaki’s past advocacy for consol bonds. However, he avoids using the term “MMT” to sidestep allergic reactions from those who don’t understand credit creation. Other parties in this tier include Sanseito and Reiwa Shinsengumi, along with the expansionist wings of the LDP (led by Shoji Nishida) and the former CDP (led by Kazuhiro Haraguchi). PM Takaichi herself undoubtedly understands this logic.
My position is in this tier, as a hardliner advocating for full fiscal acceleration until the current account hits a deficit.
2. The “Balance Sheet Analysis” School
This group, exemplified by Yoichi Takahashi and Yutaka Asaka, argues that Japan has fiscal space based on an integrated balance sheet (assets vs. liabilities). It is a more “palatable” version of expansionism for the average voter. While I don’t fully align with their accounting-centric view, I believe expansionists should not bicker among themselves right now; any path to the conclusion of “fiscal expansion” is acceptable.
3. The “Redistribution through Taxation” School
Typified by the Communist and Social Democratic parties. They argue that spending should be funded by taxing large corporations and the wealthy. While I believe bond issuance is the appropriate funding source right now, I don’t dismiss their view entirely. If they agree to cut the consumption tax, a degree of progressive taxation is a tolerable compromise.
4. The “Reluctant Cutters” (Temporary Measures Only)
These people support consumption tax cuts only because of public pressure and falling real wages. At heart, they still fear “fiscal collapse.” Komeito and Nippon Ishin no Kai clearly belong here, as does the majority of the Constitutional Democratic Party (CDP). They would likely seek to offset tax cuts with spending cuts elsewhere, which would only lead us back to the “Lost Decades.”
5. The “Fiscal Fundamentalists”
The die-hard hawks within the LDP (e.g., Yoichi Miyazawa, Fumio Kishida, Shigeru Ishiba). They refuse to consider consumption tax cuts even as a temporary measure. Surprisingly, the RENGO (Japanese Trade Union Confederation) also sits here, which is why I label them an enemy of the working class. If Takaichi wins big, they may slide into Category 4 out of necessity, but they remain the primary threat to economic recovery.
The Deception of the “Central Reform Union”
The problem with Category 4 is that once inflation subsides, they will inevitably conspire with Category 5 to demand unnecessary tax hikes and social security cuts.
Because RENGO is in Category 4/5, the CDP‘s true nature is also Category 5. They only talk about tax cuts to appease the current mood. If they were serious, why did they choose Yoshihiko Noda—the man who spearheaded two previous consumption tax hikes—as their leader in 2024? I find this fact deeply offensive.
As for Komeito, they have spent years in the coalition pushing for handouts to low-income groups while never once calling for serious tax cuts for the middle class. In fact, they left the coalition specifically because a pro-expansionist Takaichi administration was born. They cannot be trusted.
Conclusion
I have zero faith in the Central Reform Union born from the merger of these two parties. We must not let such a party win. Similarly, I cannot support Ishin in its current state, though I hope they change their tune once they join a coalition with Takaichi. The choice in this election is clear: either we commit to structural expansion, or we slide back into the abyss of fiscal discipline.
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