The Japanese government has decided to provide a one-off 100,000-yen (approx. $930) cash handout to all citizens as an economic measure to counter the effects of the new coronavirus outbreak.
The decision came in the wake of another decision that had just been made on April 7 to provide 300,000 yen (approx. $2,785) in cash to each household experiencing a large drop in income amid the spread of COVID-19. Before the draft budget for that plan could be ironed out, the government scrapped it and jumped onto another one. This unprecedented response by the government is so confusing.
A proposal to distribute 100,000 yen per person had been considered from the beginning, but was shelved due to resistance from the Finance Ministry. The provision of such handouts would cost roughly 12 trillion yen (approx. $111 million). Finance Minister Taro Aso protested the idea of a handout, since most of the flat-rate handouts he decided to distribute to the public as prime minister at the time of the 2008 global financial crisis triggered by the collapse of Lehman Brothers went into people's savings.
However, the ruling Liberal Democratic Party's junior coalition partner Komeito favored the 100,000-yen proposal, and many in the LDP also agreed with it. The reason the idea was tabled is likely because opposition parties such as the Constitutional Democratic Party and the Democratic Party for the People had submitted similar proposals to the government. Some have pointed out that the prime minister's office fiercely wanted to avoid agreeing with proposals that had come from the opposition.
The proposal to offer 300,000 yen per needy household was unpopular. According to a public opinion poll conducted by the Mainichi Shimbun and others, 46% said that it was "insufficient," well over the 22% who said that it was "reasonable."
The criteria that must be met to receive the 300,000-yen handouts was complicated and difficult to understand, and there was a sense of unfairness in the fact that the number of people in a family did not play into the amount of money a family received. More than anything, only around 20% of all households would have been eligible.
In multiple public opinion polls carried out by various media last weekend, approval ratings for the Cabinet of Prime Minister Shinzo Abe had fallen, with disapproval ratings exceeding them. The one-off 100,000-yen-for-all plan that had at one point been dropped likely re-emerged because the administration could no longer tolerate the public's criticism.
The focal point of cash handouts is speed. The Finance Ministry had opposed the 100,000-yen-for-all proposal citing that it had taken at least two months from the time a budget was passed until cash was distributed after the collapse of Lehman Brothers. Prime Minister Abe has also explained at a press conference that it will take around three months for the money to reach the public this time around.
In the latest decision, the government is not setting a limit on income for who can or cannot receive the 100,000 yen. This is probably because it has placed its main focus on speed. But if only the government had made this decision from the beginning, the handouts could have reached the public sooner.
The supplementary budget bill is set to be reworked by the government to include the 100,000-yen proposal. This will delay its submission to the Diet. The effects of going back and forth on a decision will hurt Japan greatly.