Oct. 19 (Bloomberg) -- Japanese Prime Minister Yoshihiko Noda failed to reach agreement with the two largest opposition parties on passing legislation needed to fund government spending amid a standoff over when to call elections.
Noda met today with Liberal Democratic Party leader Shinzo Abe and New Komeito head Natsuo Yamaguchi. The two parties supported legislation passed in August doubling the five percent sales tax in return for Noda’s pledge to call elections “soon” and are blocking a bill authorizing deficit financing bonds needed to pay for the rest of this year’s budget until the prime minister follows through.
“I am fully aware of the weight of my words when I said I would call an election soon and I need to prepare the environment to make a decision,” Noda told reporters in Tokyo. “If we abandon the deficit financing bill the country will run out of money.”
The legislative deadlock leaves the government with few options to revive a faltering economy being hit by a drop in exports due to a territorial dispute with China, its biggest trading partner. Noda this week ordered his cabinet to draw up stimulus steps by November that may use up to 1.3 trillion yen ($16.4 billion) in reserves from this year’s budget.
Abe, who will become prime minister if his party prevails in an election that must be called by August, said Noda had presented no new proposals in the meeting.
“To be honest, I am extremely disappointed,” Abe said. “It was a tough meeting. Mr. Yamaguchi and I made harsh comments.”
While saying he had “no intention of clinging to power,” Noda said he also wants to pass legislation aimed at reducing the number of seats in parliament and set up a framework to revise the social security system.
Polls indicate Noda’s Democratic Party of Japan will lose to the LDP in the next election. In another blow to the government, Justice Minister Keishu Tanaka today skipped a cabinet meeting and was admitted to the hospital for tests. Public broadcaster NHK Television said he would resign after he admitted to having taken donations from a foreign national and attended a gangster’s wedding years ago.
Noda needs to call a new session of parliament to pass the deficit financing bill. He said today he will call the new session at an undetermined time and continue to try to gain opposition understanding regarding the legislation.
The sixth Japanese prime minister in as many years, Noda’s approval rating was 34 percent in a Yomiuri newspaper poll published Oct. 3, compared with 65 percent when he took office in September 2011. Support for his DPJ was at 18 percent, while that of the LDP was 28 percent. Almost 45 percent had no party preference.
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