Hatoyama Cabinet fails to prepare fresh stimulus steps on time+

TOKYO, Dec. 4 Kyodo -
The Cabinet failed Friday to strike a deal on the size of fresh stimulus
measures as it had planned, postponing an announcement on specifics until next
week, Japan's top government spokesman said, adding to concerns about Prime
Minister Yukio Hatoyama's leadership in dealing with pressing issues with his
coalition partners.

Chief Cabinet Secretary Hirofumi Hirano said at a news conference that Cabinet
members will try to approve the measures at their meeting next Tuesday, instead
of Friday as initially planned.
''We still need to make the final push,'' Hirano said.
The delay is mainly due to differences of opinion within the ruling coalition
regarding the size of the stimulus package to be financed by the second extra
budget for fiscal 2009, according to ruling party lawmakers.
One of the parties in the ruling coalition, the People's New Party, is asking
that the package be even bigger to help shore up the sagging economy.
Hirano said he is hoping to finish designing the basic parts of the stimulus
package by Monday, adding that the delay would not adversely affect the
nation's economy, struggling with deflation and a recent rise in the yen.
Hirano suggested that the package may eventually be bigger than the current
plan of requiring a total of 7.1 trillion yen, making a concession to Shizuka
Kamei, the outspoken chief of the People's New Party, who does not care very
much about issuing government bonds to tide the country over the recession.
One of the Cabinet members overseeing the Finance Ministry, speaking to
reporters on condition of anonymity, said, ''We can't avoid issuing government
bonds'' if the package is enlarged in line with Kamei's demand.
Finance Minister Hirohisa Fujii has said the ministry has no plans to issue
debt-covering government bonds to finance the upcoming stimulus measures.
Hatoyama told reporters it is important to care about the opinions of the
Social Democratic Party and the Peoples New Party ''as this is a coalition
government,'' but adding it is also necessary to maintain fiscal discipline.
Hatoyama's Cabinet, which is crafting stimulus measures for the first time
since its formation in September, has been in conflict also in other important
areas of cooperation, most notably regarding the relocation of a U.S. military
base in Okinawa Prefecture.
SDP leader Mizuho Fukushima signaled Thursday that her party would not stay in
the coalition government if Hatoyama does not decide to move the U.S. Marine
Corps' Futemma Air Station out of the prefecture.
The proposed amount of 7.1 trillion yen includes costs to make up for possible
shortfalls of around 3 trillion yen in tax receipts for local governments in
the year through March 31, according to ruling party lawmakers.
Some of the lawmakers have said the package will entail actual fiscal spending
of about 4 trillion yen.
The package will likely have an effect worth around 24.3 trillion yen,
according to a draft copy obtained by Kyodo News.
Of the 7.1 trillion yen, the government led by the Democratic Party of Japan is
considering allocating about 3.4 trillion yen for measures to support regional
economies, according to the outline paper.
The People's New Party on Friday morning requested that the government increase
the amount of the state's financial burden to 8 trillion yen to craft about 4.3
trillion yen worth of support measures for regional economies, the lawmakers
said.
Until Monday, senior DPJ lawmakers had said the government would spend about
2.7 trillion yen on fresh stimulus steps for fiscal 2009 by redirecting almost
all of the money saved from freezing some of the economic policies of the
former government led by the Liberal Democratic Party.
In light of fears over the worsening economic climate, fueled last week by the
debt problems in Dubai, and requests for a bigger stimulus from the DPJ's two
junior ruling coalition partners, the Cabinet has decided to increase the size
to some 4 trillion yen in actual fiscal spending.
The government is considering tapping into reserves and savings from debt
servicing, generated by falling interest rates, to cover the additional
spending of over 1 trillion yen.
Under the package, the government has earmarked 600 billion yen for measures to
improve employment conditions and 800 billion yen to help protect the
environment, the paper said.
To assist corporate financing, mainly targeting small and midsize companies,
the government has decided to spend 1.2 trillion yen, which will be translated
into effects worth around 10.4 trillion yen such as through a credit guarantee
program.
Instead of spending billions of yen on huge public works projects, the ruling
DPJ has pledged to direct taxpayers' money to supporting people in their daily
lives.
But at the last minute, the DPJ-led government decided to approve the inclusion
of some public works projects in the package, ranging from putting power lines
underground to replacing old bridges with new ones, the lawmakers said.
The government is planning to spend about 500 billion yen to stimulate the
housing market, such as promoting earthquake-resistant homes and barrier-free
facilities, they said.
(Daisuke Yamamoto also contributed to this article.)
==Kyodo