Wednesday, September 16, 2026

Japan’s Opposition Cannot Hold Together

Centrist Reform Alliance head Junya Ogawa 
Japan’s Main Opposition Party Fragments


By Takuya Nishimura, Senior Fellow, Asia Policy Point
Former editorial writer for the Hokkaido Shimbun
You can find his blog, J Update here.
September 7, 2026


Japan’s largest opposition party, the Centrist Reform Alliance (CRA), determined to dissolve and separate itself into two groups: the former Constitutional Democratic Party of Japan (CDPJ) and the former Komeito. Although the party had hoped to be an alternative to the Liberal Democratic Party (LDP) in the Diet, the CRA failed to find common ground between ex-CDPJ and ex-Komeito members on crucial policies, or to invite some members in other parties including the LDP. Fragmentation of the opposition will encourage Prime Minister Sanae Takaichi to continue exercising arbitrary power to promote her conservative agenda.
 
Lower House members of the CDPJ and Komeito formed the CRA last January. It was an attempt to counter the LDP in Takaichi’s snap election in February by consolidating the votes of supporters of the CDPJ and Komeito. But the strategy failed because the voters regarded the merger as a maneuver not for confronting Takaichi’s policies but merely for the two parties’ survival. The CRA emerged from the February election with only 49 seats – a 70 percent loss from its pre-election seats of 167.
 
Although the CRA leaders expected the Upper House lawmakers in the CDPJ and Komeito to join immediately after the Lower House election, the Upper House members of the CDPJ hesitated. Members of Komeito, which had left the leading coalition with the LDP in the fall of 2025, were willing to join, but the CDPJ was reluctant because of basic policy differences. The CDPJ has taken liberal stances on security legislation that would include a right of collective self-defense right, construction of nuclear power plants, and building new military base in Okinawa. Komeito has stayed its conservative course on these issues. Neither party expressed much interest in compromise.
 
The CRA set a deadline for the merger at the end of August, to prepare a unified party able to compete in local elections in April 2027. But the local organizations of the CDPJ resisted an integrated campaign with Komeito since it had been an enemy for decades. The leaders of the CRA, CDPJ and Komeito officially agreed to abandon the merger in early September and to separate the party between its ex-CDPJ and ex-Komeito members.
 
The method of separation is unique and complicated. The former Komeito lawmakers will leave the CRA and return to Komeito. The former CDPJ members will join with the current CDPJ members in the Upper House to establish a new party. However, a single former CDPJ lawmaker will remain in the CRA to maintain its party status.
 
The CRA depended heavily on public funding to support its political activities. The party expects to receive 2.34 billion yen in 2026 and in fact has already accepted half the amount, 1.17 billion yen. If the CRA disappears, the rest of 1.17 billion yen will not be delivered. Hence one lawmaker in the CRA, which will be enough to maintain its eligibility to receive the remaining funds later this year. The leader of CRA, Jun-ya Ogawa, explained that the funding will be used to retire CRA’s debts for the election campaign in February.
 
The new party organized by the former CDPJ and CRA members will succeed to the funds assigned to the CRA shell. Komeito will not receive any of the funds. It is remarkable that the government will pay the funds to a single-member party that will not take any effective political activity. The CRA has in the past accused the LDP of mismanagement of its political funds, but the CRA is now vulnerable to criticism of its control of its own funds.
 
Regardless of former party memberships, it is expected that the lawmakers who leave the CRA will form a parliamentary group in the Lower House. However, those lawmakers still differ on some important policies. Whether and for how long the new parliamentary group can take integrated actions in the Diet remains to be seen.
 
The LDP, which does not have a simple majority in the Upper House, expects Komeito to cooperate on such issues as the consumption tax cut. Takaichi pushed her conservative agenda, including a national statutory prohibition on national flag vandalism, in the last session of the Diet. Takaichi and the LDP are likely to approach Komeito for support on defense budget increase or constitutional amendment. In the meantime, the opposition parties are further fragmented from the far right to the far left.
 
Historically, the CRA has had a much smaller presence in the Diet than other earlier opposition parties. In 1960s, during the Cold War era, the largest opposition party, the Japan Socialist Party, occupied 30 percent of the seats in the Lower House. The New Frontier Party, established after of its members left the LDP, won 31 percent of votes in Lower House election in 1996. The Democratic Party of Japan won 26 percent of seats in the election in 2000. By contrast, the CRA had only 10 percent of Lower House seats, and now these seats will be divided. Trouble in the opposition parties thus enhances the power of LDP – without the LDP having to do anything.

The CRA's break up is welcomed by the Takaichi's administration. The unraveling of the opposition, as witnessed in the combined CRA dissolution and the LDP win in the Okinawa gubernatorial election, will solidify Takaichi's rule. If the CRA had found a way to remain unified, it could have presented a meaningful alternative to the LDP and Takaichi's military build-up.

The CRA had received over 10 million votes among the proportional districts in the February election. Although this was only half of those for the LDP, they did represent 18 percent of the overall vote--no small voice in the Diet. The CRA did not consider the power of that political will in their rush to put an end to their union.

Sunday, September 13, 2026

Asian Art Events in September

PURCHASE BOOK
Jeju Biennale, SOUTH KOREA, 8/25-11/15, 2026.

Busan Biennale, SOUTH KOREA, 8/29-11/1, 2026.

Gwangju Biennial, SOUTH KOREA, 9/5-11/15, 2026.

BOOK TALK: KINKAKUJI AND KITAYAMA: SPACE, PLACE, MONUMENTS AND MEMORY IN JAPAN 1222-1994. 9/10, 7:00-8:30pm (EDT), VIRTUAL. Sponsor: Modern Japan History Association. Speakers: author, Thomas Conlan, Professor of East Asian Studies and History, Princeton University; Mimi Yiengpruksawan, Professor of Art History, Yale University; Moderator: Nick Kapur, Associate Professor of History, Rutgers University-Camden. PURCHASE BOOK

Autumn Asia Week New York, UNITED STATES. 9/10-18, 2026.

Geraldine Javier’s “State of the Nations” Exhibition at Silverlens Gallery, UNITED STATES. 9/10-10/24, 2026

CURATOR'S TALK: STROLLING TOGETHER IN THE WORLD OF CHINESE ART. 9/15, 6:30-8:00pm (EDT), IN PERSON ONLY. Sponsor: China Institute of America. Speakers: Annette Juliano, Research Associate, Institute for the Study of the Ancient World, New York University; Alfreda Murck, Visiting Professor, Department of Art History and Archaeology, Columbia University; David Sensabaugh, Head, Department of Asian Art, Yale University. 

BOOK TALK: IN THE SHADOW OF EMPIRE: ART IN OCCUPIED JAPAN. 9/23, 3:30-5:30pm (EDT), IN PERSON ONLY. Sponsor: Department of History of Art, University of Pennsylvania, UNITED STATES. Speaker: Alicia Volk, author, Professor, Japanese Art, Art History and Archaeology, University of Maryland. PURCHASE BOOK

Art Formosa (Taipei), TAIWAN. 9/25-28, 2026.

Ha Chong-Hyun: RetrospectiveAsian Art Museum of San Francisco, UNITED STATES. 9/25, 2026-1/25, 2027.

Asia Policy Events, Monday September 14, 2026

US Congress returns. House only in session this week and will be in recess until after the mid-terms. US Federal Reserve Monetary Policy Committee meets on Tuesday and Wednesday.

9/13-14 - European Arctic Summit hosted by the Finnish Foreign Ministry, Rovaniemi, Finland.
9/14 - First ever parliamentary elections for the Bangsamoro Autonomous Region in Muslim Mindanao, Philippines.
9/14 - 2026 Women In Defense National Conference: AI Driven. Human Powered. Where Innovation Meets the Mission and the People Who Drive It, Arlington, VA.
9/14-15 - USA India Business Summit (UIBS).
9/14-15 - International Stability Operations Association (ISOA) Pacific Deterrence and Readiness Conference, Honolulu, HI.
9/14-18 - 70th IAEA General Conference, Vienna.

PACIFIC DETERRENCE AND READINESS CONFERENCE 2026. 9/14-15, IN PERSON ONLY. Sponsor: International Stability Operations Association (ISOA). Speakers: COL Matthew Amsdell, Commander, 402d Army Field Support Brigade; Peter Belk, Former (Acting) Assistant Secretary of War and Principal Deputy Assistant Secretary of War, U.S. Department of War; Joseph Brooks, SES, Executive Director, Regional Sustainment Framework, Office of the Deputy Assistant Secretary of War for Product Support (ODASW(PS)); LTG Mike Howard, USA (Ret), Chief Executive Officer, International Stability Operations Association; and more. FEE

RETHINKING MAO AND THE CULTURAL REVOLUTION: INSIGHTS FROM A NEW CHRONOLOGY OF JIANG QING. 9/14, Noon-1:30pm (EDT), IN PERSON ONLY. Sponsor: Weatherhead East Asian Institute, Columbia University. Speaker: Bao Pu, Founder, New Century Press, Hong Kong; Moderator: Andrew J. Nathan, Class of 1919 Professor of Political Science, Columbia University.

MAKING ORDERS IN CONTESTATION: CIVIL WAR AND ONLINE SCAMS IN MYANMAR'S BORDERLANDS. 9/14, Noon-1:15pm (EDT), HYBRID. Sponsor: New York Southeast Asia Network (NYSEAN). Speaker: Kota Watanabe, Visiting Scholar, NYU Wagner Graduate School of Public Service.

DEVELOPMENT COOPERATION IN A FRAGMENTED WORLD. 9/14, 4:00-5:30pm (EDT), IN PERSON ONLY. Sponsors: Sigur Center for Asian Studies, George Washington University. Speakers: Akihiko Tanaka, President, Japan International Cooperation Agency; Christina Fink, Professor of International Development, George Washington University; Moderator: Mike Mochizuki, Non-Resident Visiting Scholar, Sigur Center for Asian Studies, George Washington University.


Wednesday, September 9, 2026

Japanese Budget Disquiet

Takaichi’s Unlimited Budget Request Causes Concern


By Takuya Nishimura, Senior Fellow, Asia Policy Point
Former editorial writer for the Hokkaido Shimbun
You can find his blog, J Update here.
September 7, 2026

 
Japan’s Finance Ministry (MOF) closed budget requests from the ministries for FY 2027 at the end of August. Because Prime Minister Sanae Takaichi removed the limits on requests for investments in projects that could contribute to economic growth, the total number of requests significantly exceeded last year’s. These expanded budget requests, suggesting that Japan wants to provide more economic stimulus, have made the markets uneasy, as seen in the steep rise of long-term bond yields. The United States has warned Japan to adjust its fiscal policy to stop, if not reverse, these increases.
 
The MOF wraps up budget requests for the coming fiscal year at the end of August every year. The ministry examines these requests and formulates an annual budget bill by December. The Diet discusses the bill in its ordinary session normally convoked in January. The leading parties hope to pass the budget bill by the end of March; the budget would then govern projects in April or thereafter.
 
If the government needs to spend more on unexpected events, for example, recovery from a natural disaster or support for urgent economic stimulus, the government will formulate a supplemental budget in the fall. Takaichi wants to abolish the supplemental budget process to make the level of governmental spending more predictable for businesses. It is likely that her approach reflects the views of the Ministry of Economy, Trade and Industry (METI), for which economic growth is everything.
 
Historically, an annual budget has been formulated based on MOF’s estimation of the government’s tax and other revenues over the next year. Embracing a well-known principle of “calculate income, regulate outgo,” the MOF allots portions of the expected revenue to every ministry. This allotment process effectively caps the budget request of each ministry. It is the reason the annual budget request is called a “ceiling.” Through the allotment process and the examination of budget requests, MOF controls government spending and has earned the status as “the most powerful ministry.”
 
METI-leaning Takaichi hopes to reform this system. Regardless of the estimate of next year’s revenue, she ordered each ministry to submit a budget request without regard to the ceiling, at least insofar as the ministry’s expenditures above ceiling would contribute to economic growth or crisis management. The Ministry of Defense made the largest ever request at 8.9 trillion yen for projects including the introduction of AI in command and control. METI increased its own requests to support businesses on AI, semiconductors, and robotics.
 
It is not strange that the total amount of budget requests hit a new record. It swelled to 143.06 trillion yen, exceeding the previous year’s total by 20.75 trillion yen. Uncapped requests for investment amounted to 12.17 trillion yen. The MOF explains that this amount is the sum of the annual budget and the supplemental budget in FY2027. However, the amount still exceeds the sum of these two budgets in FY2026, which was 140.61 trillion yen. There is no guarantee that the government will not need a supplemental budget for an unpredictable natural disaster next year.
 
The greatest concern, however, is Japan’s payments on its government bonds. The total estimated expenditures in FY 2027 for the redemption and payment of interest on outstanding government bonds is at a record high 36.63 trillion yen. With the recent trend of policy interest rate increases by the Bank of Japan (BOJ), the payments for government bonds are expected to increase. The assumed yield rate for government bonds is 3.8 percent in FY2027, 0.8 percentage points higher than in FY2026.
 
Concern about Japan’s lack of fiscal discipline was immediately reflected in the long-term bond market. Bond prices fall as yields rise. The ten-year government bond yield hit three percent, the highest level in the last thirty years. It happened on the next day when the MOF closed budget requests. Expectations that the BOJ would hike the policy interest rate that the rise in crude oil prices would increase price inflation also caused bond yields to go up and bond prices to drop.
 
A rise in the long-term bond yield in Japan can be linked to a similar rise in the U.S. longer-term bond rate. U.S. Secretary of Treasury Scott Bessent said on September 1 that he expected Japan to “do the right thing,” effectively pressuring the BOJ to raise the policy interest rate. Referring to the success of former prime minister Shinzo Abe’s reflationary policy in stimulating the Japanese economy, Bessent said that Japan “should actually let that run and stop the reflation” in his press conference after the G20 meeting of finance ministers and central bank chiefs in Asheville, North Carolina.  That is, Bessent implied, Japan should cease further stimulus and direct its fiscal policy toward lowering inflation.
 
A reflation policy typically consists of expansive fiscal policy and monetary easing. The Abe administration used this policy to get rid of deflation. It is obvious that the current problem of Japan’s economy is not deflation, but inflation. Nevertheless, Takaichi has decided that what was good for Abe will be good for her, and she is trying to mobilize the national budget for investments to spur even greater economic growth and to pressure the BOJ not to raise the policy interest rate. Her economic policy, called “Sanaenomics,” looks to be facing opposition from the markets and the U.S.

Tuesday, September 8, 2026

JAPAN UPDATE - View from Australia

                          Japan Update 2026

Australia-Japan Research Centre

Australian National University


Wednesday 9 September 

9 AM - 5 PM (AEST, UTC+10)

Tuesday 8 September

7 PM - 3 AM (EDT)

in-person and live streamed on Vimeo

Please indicate whether you will attend in person or online (via live stream on Vimeo) at the checkout. All attendees will receive a confirmation email with instructions for accessing both the in-person and online events


PROGRAM

Registration & tea and coffee (8:30-9:00am)

Welcome (9:00am)
Shiro Armstrong, Director, Australia-Japan Research Centre, The Australian National University

Introduction
Rebekah Brown, Interim Vice Chancellor of The Australian National University

Opening Keynote
Tim Ayres, Minister for Industry and Innovation and Minister for Science

Vote of Thanks
HE Kazuhiro Suzuki, Japanese Ambassador to Australia

The New Normal in Japan's Economy (9:45-10:45am)
Keynote: Koji Nakamura, Bank of Japan
Chair: Ippei Fujiwara, University of Tokyo and Keio University
Katrina Di Marco, Deputy Secretary, Treasury

Morning Tea (10:45-11:15am)

Foreign Policy and Political Choices (11:15-12:45pm)
Chair: Lauren Richardson, The Australian National University
Yves Tiberghien, University of British Columbia and Taipei School of Economics and Political Science
Naoko Eto, Gakushuin University
Tomohiko Satake, Aoyama Gakuin University
Evelyn Goh, The Australian National University

Lunch (12:45-1:45pm)

The State of Japanese Studies in Australia (1:45-3:00pm)
Keynote: Sawako Shirahase, University of Tokyo
Chair: Simon Avenell, The Australian National University
Nana Oishi, The University of Melbourne
Kent Anderson, The Australian National University
Carolyn Stevens, Monash University

Afternoon tea (3:00-3:30pm)

The Next 50 Years of the Australia–Japan Relationship (3:30-4:50pm)
Keynote: Peter Drysdale, The Australian National University
Chair: Geraldine Doogue, Australian Broadcasting Corporation
Kate Kitagawa, La Trobe University
Shiro Armstrong, The Australian National University
Melissa Conley Tyler, The University of Melbourne

Closing and Thank You (4:50-5:00pm)
Ippei Fujiwara, University of Tokyo and Keio University
Simon Avenell, Director, Japan Institute, The Australian National University

Sunday, September 6, 2026

Asia Policy Events, Monday September 7, 2026

It is a federal holiday in both the U.S. and Canada on Monday. The U.S. Congress is on a weeklong recess. The U.S. House of Representatives will take the following week for recess as well. 

STATE DEPENDENCE OF MONETARY POLICY DURING GLOBAL SUPPLY CHAIN DISRUPTIONS. 9/7, 5:00-6:30pm (JST), 4:00-5:30am (EDT), VIRTUAL. Sponsor: Canon Institute for Global Studies (CIGS), Tokyo, Japan. Speaker: Francesco Zanetti, International Research Fellow, CIGS.


Sunday, August 30, 2026

Asia Policy Events, Monday August 31, 2026

Asia Policy Point's weekly Asia Policy Calendar returns from summer recess. Thus, only Monday events will be posted here, on our blog, for the rest of the year. If you want to access the full calendar, please subscribe via this LINK.

TAKEAWAYS FROM THE 2026 INTERNATIONAL AIDS CONFERENCE. 8/31, 9:00-10:00am (EDT), VIRTUAL. Sponsor: Global Health Policy Center, CSIS. Speakers: J. Stephen Morrison, Senior Vice President and Director, Global Health Policy Center, CSIS; Lloyd Mulenga, Professor of Infectious Diseases, University Teaching Hospital, Zambia; Doris Macharia, President, Elizabeth Glaser Pediatric AIDS Foundation; Jirair Ratevosian, Research Scholar, Duke Global Health Institute; Omar Sued, HIV Treatment and Care Regional Advisor, Pan American Health Organization.

US-NORTH KOREA REMAINS RECOVERY COOPERATION: PAST, PRESENT AND FUTURE. 8/31, 2:00-3:00pm (EDT), VIRTUAL. Sponsor: National Committee on North Korea (NCNK). Speaker: Kelly McKeague, Director, Defense POW/MIA Accounting Agency.

Saturday, August 29, 2026

An American Progressive View of Asia

Matt Duus
INTERVIEW: U.S. Progressive Leader Eyes Greater Cooperation with China

First published in JiJi Press, 8/17/2026, reprinted here for educational distribution

Washington, Aug. 17 (Jiji Press)--A United States guided by progressive foreign policy would seek to improve cooperation with countries around the world, including China, said Matt Duss, a prominent progressive thought leader in the United States, in an interview with Jiji Press this month.

   The recent electoral success of left-wing candidates in the United States has led to growing interest in progressivism within the country. Although progressivism is usually associated with domestic reforms intended to reduce inequality and increase social justice, its foreign policy tenets are less widely understood.

   "As a progressive, I take the ethic of solidarity seriously. I think we live in an interconnected world," said Duss, executive vice president at the Center for International Policy, a progressive think tank based in Washington. "Our security and prosperity should not come at the expense of the security and prosperity and safety of communities elsewhere."

   In terms of security, Duss calls for a re-evaluation of the U.S. force posture globally, saying that the presence of U.S. troops creates less stability in some regions such as the Middle East. He sought to reassure, though, that any changes to the terms of the U.S.-Japan alliance would be done in close consultation with the Asian ally.

   "I think we need to pay close attention to the debate within Japan. There's obviously a lot of concern within Japanese society about the continuing U.S. troop presence. I think we should take that seriously with Japan as a partner democracy," he said. "I think one thing that we can promise is that a progressive administration would not act precipitously in making these decisions."

   Duss, who previously served as foreign policy advisor to Senator Bernie Sanders, arguably the leading voice in the American progressive movement of the last 10 years, says that, while he is sympathetic to the concerns of some in Asia over the rise of China, it is incumbent on the world's two largest economies to find ways to coexist to bring stability and safety to the region and the world.

   "But I think it's a mistake to characterize the (U.S.-China) relationship mainly as competition. There is going to be cooperation. I would hope there will be more cooperation than competition, and I think the United States needs to really press forward to identify those areas of cooperation."

   While citing climate change, pandemics, and global development as areas ripe for increased cooperation with China, Duss rejects the orthodoxy of the U.S. foreign policy establishment that China's massive global infrastructure project intended to connect emerging markets and developing nations with Beijing, known as the Belt and Road Initiative, is economic warfare.

   "Many people here in Washington see this as a threat," Duss said. "They see these regions as an arena of competition with China. I don't think it's necessarily right to characterize that all as competition."

   Overall, progressive foreign policy differs most from the trade and economic strategies of the past by focusing on the needs of working families and communities ahead of the "elite establishment."

   "I don't want to pit American workers in some kind of zero-sum competition against workers in China or Japan or anywhere else in the world. I think we need a kind of new global trade order that really puts the needs of workers front and center."

   While Duss foresees a significant shift in trade policy under a progressive administration, he does not stray far from long-standing strategy in terms of Taiwan, perhaps the most strategically sensitive issue in the U.S.-China relationship. Instead of saying how a progressive U.S. administration would react to an invasion of Taiwan, Duss emphasized the need to maintain the current admittedly "unsatisfactory" status quo.

   "I think the best course forward is to lower the temperature to make clear that the United States does not support any kind of military solution by either side, we maintain a 'One China' policy, (and) that this issue should be resolved peacefully," he said, largely echoing existing U.S. policy.

   While there will be points of disagreement between the United States and China, such as Taiwan or the "absolutely atrocious" treatment of its Uighur minority population, Duss asserts that preventing ties from worsening is in everyone's interest.

   "(In) a relationship that is so broad and multifaceted and so consequential for the entire global community, I think the focus needs to be on identifying areas of cooperation and coexistence between the United States and China," he noted.

Monday, August 24, 2026

Another Japan Resource

 

A NEW JAPAN RESOURCE

JapanHands

JapanHands is a free, online public resource highlighting Japan-focused organizations and events to (for) English-speaking audiences.

Through an online directory, an events calendar, and a newsletter, JapanHands says it "aims to cultivate a wider and more inclusive generation of  'Japan Hands' "—individuals with the knowledge, relationships, and experience to engage meaningfully in Japan’s interactions with the world community. It hopes to expose its viewers to a broad and sympathetic view of "things Japanese."

Organizations can register at no cost and post their events on the shared calendar. The public can freely access all listings, programs, and opportunities on the site. JapanHands is an open, inclusive hub for anyone interested in Japan-related activities in North America and beyond.

JapanHands is a passive site that depends upon the initiative of its viewers and participants to enroll their organizations and to publicize their events. Corrections and updates are also the responsibility of contributors.

Developed by the National Association of Japan-America Societies (NAJAS), in partnership with the American Friends of the International House of Japan (AFIHJ) and with generous seed funding from the United States–Japan Foundation, JapanHands represents a long-term investment in the infrastructure and public diplomacy that supports Japan’s engagement with the U.S. and the world.

Through these links, you can search the organization directory, browse for events, and subscribe to the newsletter for occasional updates. Here you can apply to list your organization in the directory. Currently, the directory is light on policy and academic organizations. Also not listed are the many Japanese governmental and business organizations that are in Washington, New York, and Los Angeles.

OTHER ONLINE RESOURCES ON THINGS JAPANESE

Sunday, August 23, 2026

Can Takaichi Win the Tax Cut Battle?

Dispute over Takaichi’s Proposed Consumption Tax Cut


By Takuya Nishimura, Senior Fellow, Asia Policy Point
Former editorial writer for the Hokkaido Shimbun
You can find his blog, J Update here.

August 17, 2026

Prime Minister Sanae Takaichi announced on July 30 that she would introduce legislation to reduce the consumption tax rate for food from eight percent to one percent. She hoped the reduction would take effect in April 2027 and continue for two years. The rate would return to eight percent in 2029. Although the national council she launched has not yet reached a consensus on this issue, Takaichi had before her two affordability options: a tax cut or a cash handout. Without meaningful discussion with others, Takaichi picked the former. Even some lawmakers in the ruling Liberal Democratic Party (LDP) opposed Takaichi’s arbitrary decision.

A consumption tax cut was originally a plank in the platform of the opposition parties for the Lower House election in February 2026. Recognizing its appeal to the voters, Takaichi took a similar approach for the LDP but with the cut limited to food and to a two-year period, after which the eight percent rate would return. A refundable tax credit would then be introduced. That was Takaichi’s plan.

After achieving victory in last February’s Lower House election, Takaichi launched the multi-partisan National Council for Social Security to discuss and implement her plan. Why social security? That is because revenue from the consumption tax is designed to be spent on social security. The Japan Communist Party and Sanseito were excluded from the council because they had opposed the refundable tax credit. The council had an arbitrary nature from the beginning.

The council failed to reach a consensus. The leading parties, supposedly backed by Takaichi, proposed a reduction in the consumption tax rate on food from eight percent to one percent and an additional cash handout equivalent to the remaining one percent of the consumption tax. The parties sought the same economic effect as the complete elimination of the consumption tax on food. The opposition parties demanded the opposite of what Takaichi later proposed: a cash handout rather than any reduction in the tax rate.

The interim report that the council submitted to Takaichi on July 29 was nothing more than an enumeration of opinions of the parties. They all at least agreed on a cash handout based on family income starting in fiscal year 2029. The council effectively turned down a refundable tax credit because a tax credit would require complicated reform of the taxation system. The council replaced the credit with a cash handout.

It was the next day when Takaichi decided to pick the brains of the leading parties. She advocated for a de facto moratorium on the consumption tax on food for two years and the introduction of another cash handout based on family income. Takaichi tends to make unilateral decisions, leaving minority opinion behind, when she fails to achieve a consensus on an important issue. This habit was seen in the reform of the Imperial House Law in which she insisted on patrilinear succession to the throne of the Emperor.

Takaichi requested the LDP to approve her tax reduction/cash handout plan by early August. However, multiple disputes arose in a meeting of the LDP Research Commission on the Tax System on July 31. One controversy is whether Japan has the fiscal resources to support a tax cut. The moratorium on the consumption tax cut for two years will cost ten trillion yen. Takaichi has not revealed a viable resource for her policy, only referring to some vague reform in spending.

This ambiguity about the fiscal resources for a consumption tax cut has already caught the attention of the markets, which are decidedly skeptical. Although Takaichi reiterated that the tax cut would not require the government to issue more bonds, the long-term interest rate hit a new high in these past three decades. The Japanese yen kept depreciating, inviting coordinated intervention by the governmental authorities of Japan and the United States.

At the meeting of the LDP, lawmakers erupted in frustration. “Finding a resource for the tax cut must be our promise to the voters,” said former Minister of Defense Tomomi Inada, calling for a cash handout instead of a tax cut. Other lawmakers referred to the difficulty in the resumption of the tax rate two years later. An immediate return to eight percent from one percent will mean a noticeable tax increase for taxpayers. “I’ll be responsible for the resumption of the tax rate,” said Takaichi, but no one can guarantee that she will still be the prime minister in 2029.

Having seen an abrupt drop in the approval rating for her cabinet, Takaichi is bent on a consumption tax cut, convinced that the policy can restore her popularity. But the discussion on the consumption tax rate is showing signs of political struggle.

Tomomi Inada is one of the female leaders who would be expected as an alternative to Takaichi. She firmly protested the bill for easing conditions for retrial that was proposed by the Ministry of Justice. Another possible female leader, former Minister of Economy, Trade and Industry Yuko Obuchi, stepped down as a core member of the LDP commission on the tax system. Both are frustrated with Takaichi’s arbitral process in deciding such highly important policy as consumption tax cut. 

This internal dispute on a single issue in the LDP reminds us of the sharp opposition over postal reform during Prime Minister Jun-ichiro Koizumi’s tenure in the early 2000s. Facing firm opposition from veterans in the LDP, Koizumi employed populism for his agenda backed by a high approval rate. He labeled those rivals “as protesting powers” against reform and accomplished the postal reform by ousting the protesters from the party. That was called “theater politics” in which a hero defeats bad guys. Can Takaichi be as clever as Koizumi in handling party politics?

The LDP officially approved Takaichi’s consumption tax cut plan on August 5. Takaichi’s allies in the party rallied for implementing her agenda. But some LDP lawmakers are still skeptical about cutting the consumption tax, which is a fiscal resource for welfare policies for aged people. There promises to be an intensive discussion on the tax cut bill in the fall session of the Diet.

The Future of American Competitiveness

The U.S. Needs to Fund Research to Be Competitive

Michael Schiffer, Senior Advisor at Scalare Advisors, Senior Fellow at the Center for American Progress, and APP Member.

First Published August 19, 2026 on the American Leadership Initiative Substack.

The United States is in the midst of a fundamental reconsideration of its economic relationship with the rest of the world. Tariffs, export controls, investment screening, supply-chain diversification and efforts to bring manufacturing back to American soil have moved from the margins of economic policy to its center. The rationale is straightforward: in a world of geopolitical competition and vulnerable supply chains, the United States cannot afford to depend on foreign sources for technologies and products that are essential to its economic and national security.

While this premise has broad support, there is a legitimate debate over how tariffs should be designed, how broadly they should be applied, and what costs Americans should be willing to bear in pursuit of greater economic resilience. But there is a more fundamental question that has received less attention: what happens if the United States uses trade policy to encourage production at home without maintaining the scientific, technological and industrial capabilities needed to make that production competitive?

Trade policy can change the incentives facing American companies. It cannot, by itself, create the engineers, scientists, technicians, factories, research institutions and supply chains that allow those companies to compete.

Much of American innovation has its roots in government funded research. The land-grant universities that trained generations of engineers, DARPA’s investments that helped produce the internet, and the NIH research infrastructure that has generated generations of medical discoveries were all the products of Americans making long-term bets on the country’s productive capacity and backing those bets with public resources to build the infrastructure, knowledge and human capital on which private enterprise could flourish.

That model of public investment is more important now than ever because the nature of international economic competition has changed. China and other countries are investing heavily in advanced manufacturing, artificial intelligence, biotechnology, energy and the infrastructure that supports them. Companies are reconsidering where they manufacture and source critical inputs. Governments are competing for investment and technological talent. Supply chains are being reorganized not only according to cost and efficiency, but according to resilience and national security. The result is a new economic landscape in which trade policy and domestic investment are inseparable. And success will require combining open markets with technological leadership, industrial policy, and worker training with secure economic partnerships.

The semiconductor industry provides perhaps the clearest example. The CHIPS and Science Act reflected a recognition that advanced semiconductor manufacturing is not simply another industry. Chips underpin virtually every modern economy, from automobiles and telecommunications to artificial intelligence and defense. The program’s early results suggested that targeted industrial policy could generate tangible benefits: CHIPS-funded projects created tens of thousands of jobs and raised wages in affected communities. Semiconductor manufacturing jobs now average $57.78 an hour, demonstrating that investments in advanced manufacturing can anchor high-value economic activity in American communities while strengthening capabilities essential to national security.

The engineers and scientists who develop new technologies do not appear when policymakers decide that a particular supply chain has become strategically important. They emerge from universities, laboratories and research programs that require years of sustained investment.

This is why reductions or uncertainty in federal research funding matter to economic competitiveness even when the immediate objective is fiscal restraint. The damage is rarely visible in a single budget year. It appears later, in the technology that is never developed, the company that is never founded, the researcher who takes a position elsewhere, or the manufacturing facility that chooses a different country because the surrounding ecosystem is stronger. In addition to growing investment in federal R&D, we must increase investment in U.S. STEM education, as well as reopen immigration to high skilled workers from around the world.

The United States has seen this dynamic before. Google’s origins, for example, can be traced in part to a National Science Foundation grant to two Stanford graduate students. The lesson is not that every government-funded research project produces a Google. It is that the economic returns from public investment in science are often unpredictable, long-term and vastly larger than the original investment.

That makes the current debate over trade policy particularly consequential. The administration has increasingly used tariffs and other trade measures to encourage domestic production, including in semiconductors and critical materials. The logic is understandable: if foreign dependence creates strategic vulnerability, changing the price and availability of imports can encourage companies to build capacity in the United States. Recent trade measures on semiconductors and polysilicon explicitly connect import policy with strengthening domestic supply chains.

But a tariff is an instrument, not a strategy. It can change relative prices. It can discourage dependence on a foreign supplier. It can give domestic producers greater room to compete. What it cannot do is determine whether American companies have the technology, workers, energy, infrastructure and supplier networks needed to take advantage of that opportunity.

If policymakers want companies to manufacture more in America, the country must also have the research institutions, skilled workforce, infrastructure, energy, component suppliers and technological ecosystems necessary to support it, and invest in the capabilities that allow American companies and workers to compete when market incentives change.

A serious American industrial strategy does not require Washington to decide which individual companies should succeed. It requires government to build the conditions in which strategically important industries can succeed: world-leading research, a skilled workforce, reliable and affordable energy, modern infrastructure, access to capital, predictable investment incentives and trade relationships that expand markets while reducing dangerous dependencies. Tariffs and trade policy are one component of that strategy, not a substitute for the entirety of it.

For decades, the argument was that trade policy, technology policy and economic statecraft had direct consequences for American wages, jobs and communities. That connection remains real. A semiconductor factory creates jobs not only inside the fab but throughout a regional network of suppliers. A research university trains the scientists and engineers those companies will eventually need. A federal research grant can generate technologies that become the foundation of entirely new industries.

The reverse is also true. Weakening those ecosystems can make otherwise sensible trade and industrial policies less effective.

Nor should industrial strategy stop at the water’s edge. The United States does not need to produce every important input domestically. But it does need to ensure that America and its allies collectively possess the capacity to produce the technologies, materials and components on which our prosperity and security depend. Building resilient economic partnerships with trusted countries should be treated as part of industrial strategy itself.

Americans can disagree about tariffs and the appropriate role of government in the economy. They can disagree about how much protection domestic industries should receive and how quickly supply chains should be reshaped. But if the United States is going to ask American workers to compete in a more contested global economy there should be consensus that we need to make sure they have the tools to do so.

The objective is not simply to return to an era when efficiency and low consumer prices were the only measures of a successful trading system. The objective should be capacity: the ability to innovate, manufacture, adapt and compete when circumstances change.

And that is ultimately how today’s trade policies should be judged. Tariffs can change the terms on which Americans trade with the world. Export controls can limit access to sensitive technologies. Supply-chain policies can reduce dangerous dependencies.

But none of those tools can substitute for the underlying capabilities of a competitive economy.

The United States has spent generations building those capabilities. The challenge now is to make sure that, even as we rethink how America trades with the world, we do not neglect the investments that determine whether America can continue to lead.