The Hatoyama Cabinet: Focus on National Strategy, Finance, and Administrative Reform

The Hatoyama cabinet has been formed. We believe the credibility of the DPJ's election promises as well as the Hatoyama administration will hinge on a few key posts and their appointed ministers.

(1) Naoto Kan, deputy prime minister and state minister in charge of national strategy, economic and fiscal policy. With his experience fighting bureaucrats, Kan is considered a good choice for the planned National Strategy Bureau, which will oversee policies and the budget.

(2) Hirohisa Fujii, minister of finance. Mr. Fujii is a recognized expert on the national budget and tax issues, and was the finance minister for the Hosokawa and Hata administrations from 1993 to 1994. His knowledge of the national budget and his connections in the Ministry of Finance will be important in achieving a smooth transistion for the budget formation process from finance ministry bureaucrats to the DPJ.

(3) Akira "Mr. Nenkin" Nagatsuma, minister of health, labor and welfare. Mr. Nagatsume is energetically committed to administrative reform, and has been a sourge of the bloated Social Insurance Agency. The MHLW in particular is ripe for administrative reform, but Mr. Nagatsuma will have to successfully deal with the powerful doctor's lobby.

(4) Seiji Maehara, minister of land, infrastructure, transport and tourism. Mr. Maehara has also been a vocal critic of the "amakudari" practice of ex-senior bureaucrats landing cushy jobs in government-sponsored corporations, as well as the historical waste in public works expenditures.

(5) Yoshito Sengoku, state minister in charge of administrative reform. Mr. Sengoku's predecessor in the LDP, Michio Watanabe, resigned in disgust and frustration after running into brick wall after brick wall in the Aso Cabinet's LDP-led regime. Prior state ministers in charge of administrativve reform under other LDP-led cabinets such as the Koizumi Cabinet also encountered fierce resistance to administrative reforms.

Mr. Kan will be in charge of forming the National Strateg Bureau (NSB) will be tasked with crafting key national policies including budget guidelines and a basis for a new foreign policy. It will replace the LDP's Council on Economic and Fiscal Policy, which was headed by the prime minister, and similar in function to the US Office of Management and Budget (OMB), although very likely alot smaller in terms of staffing. The NSB will be a bellwether indicating how successful the DJP will be in reducing the role of Japan's powerful bureaucracy's to "experts on tap but not on top".

Mr. Sengoku will be the point person for the formation of The Administrative Reform Council (ARC), whose task will be to assess budgets and programs with an eye toward squeezing out up to JPY10 trillion of wasteful spending over the next three years.The ARC will be similar to the US OMB in function although nowhere near as large, and will report to the prime minister instead of the Diet. The re-allocation of funds and cost savings achieved by the ARC are expected to be a major source of the funding needed for the DPJ's up to JPY16 trillion aimed at improving the livelihoods of Japanese consumers.