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Election boils down to whether voters feel better off

Prime Minister Shinzo Abe at a press conference.

TOKYO -- Voter perceptions about the state of the economy and confidence in the Abe government's ability to turn it around will constitute the biggest factor in the coming lower house election.

    Prime Minister Shinzo Abe seems happy to make the election about Abenomics. He urged ruling Liberal Democratic Party lawmakers Friday to make their campaign message a question of "whether we move forward with our economic polices or we're making a mistake."

     A weak yen has lifted corporate earnings, mostly among big exporters. But it has also pushed up prices of fuel and other imported goods, straining household budgets and regional economies. Abe needs to convince voters that bigger corporate profits will lead to higher wages, spreading the economic recovery to small-town Japan.

     The Democratic Party of Japan and other opposition parties will try to show they care about kitchen table issues. Abenomics' critics say its weakening of the yen has stunted the real value of workers pay, making it harder just to get by. But opposition parties have not explained in detail how they would achieve sustainable wage growth.

     The prime minister's economic agenda has consisted of reining in a rampant yen -- worth 85 to the dollar when he took office in December 2012, compared with 117 now -- and boosting corporate competitiveness to pull Japan out of deflation. The former has relied on monetary easing by the Bank of Japan, and the latter is the aim of a growth strategy.

     Abe's government wants to begin a multiyear corporate tax cut in fiscal 2015 that would reduce the effective rate from slightly more than 35% to somewhere in the 20s. But this would do little to help small and midsize enterprises, the DPJ argues.

     The Japan Innovation Party and the Party for Future Generations lean in much the same direction on economic policy as the ruling bloc. But "Abe's LDP is so tied down that it cannot undertake real reforms," insists Kenji Eda, who co-leads Innovation. Arguing that Abenomics' growth strategy lacks boldness, Eda promises regulatory reforms that cut through vested interests.

     On employment, the Abe government wants to rewrite the temporary-worker law and ease limits on work hours to allow "a diversity of work patterns." Opposition parties are emphasizing job security. DPJ President Banri Kaieda said Friday that his party would "make our employment system strong" as part of its goal of reviving "a broad middle class."     

Sketchy on fiscal policy

The LDP, its coalition partner Komeito and the DPJ all favor postponing a consumption tax hike originally set for next October. These are the same three parties that struck a deal in 2012 on raising the tax to 10% in two stages, the first of which took place this past April.

     Abe says he wants to delay the second increase until April 2017 while still pursuing the goal of a primary surplus by fiscal 2020. The LDP promises to offer a plan by next summer for meeting this target.

     Both ruling and opposition parties will acknowledge the need to right Japan's listing public finances. But since higher taxes do not sit well with voters, parties' fiscal ideas are skewed toward cutting spending, to the neglect of ensuring ample revenue. The LDP will pledge to begin an expansion of child and nursing care entitlements even before the consumption tax hike that is supposed to pay for it. But it has not mentioned alternative sources of funding.

Nuclear power, national secrets and making nice with the neighbors

With minor differences, the ruling parties and the DPJ favor restarting nuclear reactors that have been deemed safe by the industry's regulator. But voters will likely want to know where they stand on longer-term challenges with no easy solutions, such as decommissioning old or damaged reactors and finding permanent storage for radioactive waste. The Japanese Communist Party and the Social Democratic Party oppose restarting idle reactors.

     On national security and foreign policy, Abe's LDP stands well apart from the opposition.

     Speaking to reporters Friday, Kaieda, the DPJ leader, accused Abe's government of "two years of playing havoc with constitutionalism" by re-interpreting Japan's self-imposed limits on self-defense and passing a controversial national secrets law.

     Abe isn't backing down. The LDP's campaign platform calls for quick action on national security legislation that would build on a July cabinet decision affirming that Japan can engage in collective self-defense -- i.e., come to the aid of allies under fire.

     Japan still needs to mend fences with China and South Korea, which were galled by Abe's visit to the war-associated Yasukuni Shrine late last year. Abe did manage to hold his first summit with Chinese President Xi Jinping this month. But Sino-Japanese relations remain cool, and the prime minister has yet to sit down formally with South Korean President Park Geun-hye after nearly two years in office. As for North Korea, Abe's attempt to get Pyongyang to come clean about past abductions of Japanese nationals has produced no solid leads so far.

     In its campaign platform, the LDP promises to seek better relations with neighboring countries. But it also vows to "restore Japan's honor" by disputing "unfounded criticism" on matters of history, including wartime "comfort women," a painful subject in South Korea. The DPJ and other opposition parties say the Abe government lacks a strategic vision for Asian diplomacy.


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