Abe's record draft budget spending highlights balancing act

Borrow more to pay the interest on debt, that's going to end well. The rich get richer the rest get a bill.

Here is the key number: of the upcoming ¥95.88 trillion budget, ¥23.27 trillion will be allocated for national debt servicing costs. Yes ¥23.27 trillion just to pay for the debt servicing costs not the debt itself.

Now put this number in perspective in order to understand how out of control Japan's debt is:

¥23.27 trillion, that's nearly half of the government tax revenue estimated at 50 trillion yen. So nearly half of our taxes are used to pay the debt servicing costs alone but since the government revenues are already all consumed before even it tries to pay the debt servicing costs, the government is borrowing money for it. Yes the government is creating even more bigger debt to pay the servicing costs of the previous one (again servicing costs not debt itself). This is crazy!!

¥23.27 trillion, that's fairly close to what the government is spending on social security costs (pensions and medical care) which is ¥30 trillion. So the Japanese government is spending almost as much on debt servicing costs as for pensions and medical care for its population. This is madness!

Anyone saying that Japan huge debt is not a big deal because the interests are low since the debt is supported mostly internally is out of his/her mind. It has become so huge that it just costs tax payers and the country an insane amount of money.

If only all the debt created would have been done or is done for really helping the country and its people, I would argue then be it, that's good investments. But it has been all waste....... and the people in Japan have no idea what is going on here. They have put their destiny in the hands of corrupted, totally incompetent, old and ugly oyajis that have ruined the country and continue to do so.

Finally given the numbers above, the increase in sales tax is not doing anything to help the country with its huge debt, it simply can't, particularly when the government is keeping doing failed policies by spending a lot in public works for the sole benefit of the construction companies. One would need an increase in taxes so radical that it will just screw up the people and the economy with it.

And in that sense, Japanese are again being cheated by their government but yeah,.. they can still watch AKB on TV, right?

daito_hak - well defined. Thank you for that. Sounds like "The rich old crooks" are Borrowing from Paul to Pay Peter. "The poor" and there grandchildren will be paying for their glutony. So who is ctualy getting the interest? Why is Japan continuing to and giving more to countires with little of no debt? So where will it end? Who is not goin to get their money when it all falls over? Argentina reneged on it world dept but Japan Gov is different, is it not? I am worried for the future generations, there just seems no end in sight.

daito_hak-san,

Shocking but accurate data.

Abe, out of stupidity or weakness or both, is killing this country.

And nobody seems to care!

Well done Abe! You are in the right path for economy recovery!

This will all turn out to be nothing but a wet dream for Shinzo Abe.

Oh, bla, bla, bla! The key word in the headline is, act! The Japanese economy is doomed to fail due to the lack of foresight during the boom years of the 80's and 90's. The pension and health insurance systems have failed. There is no money for infrastructure and public services. And, the world's largest public debt just keeps increasing through Abenomics printing more money. Their only way out is to tax the heck out if the middle class to keep corporations afloat. No ginger! - しょうがない！

daito hak presents a seductive argument. But it's a false premise. Public finance is not household finance. Debt servicing payments, for example, are recorded as income in the private sector and as revenue in the publlc sector. the money doesn't leave the system. Wherever there's a deficit, there's an equivalent surplus elsewhere. You must analyze the surplus if analyzing the deficit.

The debt doesn't "cost the taxpayers" unless bad politicians want it to. When affluent people in Europe paid income tax rates of 80% or more in the 1960s and 70s, the public finances of their countries were balanced. The deficits, if anything, have coincided with lower rates of income tax. That's not my opinion, that's a fact.

A public policy Ponzi scheme, well I never..

daito_hakDec. 25, 2013 - 04:13PM JST

Congratulations daito, this is well written and well analyzed post.

The sovereign debt of Japan is already too big too late, the tax increase is just a drop in bucket. It seems to me that Japan has already missed a boat for ultimate solutions. If I were Japanese, I would shift some of my asset to elsewhere.

One reason money is "given" to other countries (including some with no debt) is that there are strings attached. The money is used to buy things from Japan's big corporations. Think of much of it as corporate welfare. Having explained that I wish a Merry Christmas to all.

Besides other things ,Japan should seriously consider investing in manufacturing activities in other growing markets like India,Brazil,Mexico etc. This would generate new demands for Japanese Manufacturers and ensure income on continuous basis for a long term basis.To maintain an edge over other countries,Japan should also focus on developing new technologies in high tech fields.

This would also facilitates servicing of National debts,more employmeent and better control over imposing additional or new Taxes

When affluent people in Europe paid income tax rates of 80% or more in the 1960s and 70s, the public finances of their countries were balanced. The deficits, if anything, have coincided with lower rates of income tax. That's not my opinion, that's a fact.

The fact is that government spending in OECD countries averaged 28% in the 60's, and said countries were seeing rapid growth in population and industry. Now government spending is nearly half of GDP, and population/industrial growth is at a standstill.

Affluent Europeans hid much or most of their income in tax havens around the world, and this was easy to do in the pre-digital era, before precise record keeping was available or enforced. Affluent Europeans likely paid much less tax in those days than they do now.