Likening the Government and Family Budget

(TAKAHASHI Yoichi, PPPC Chairman)

The Cabinet officially approved the draft budget FY 2015 on January 14. The major papers, like always, released the articles likening the government budget to that of a family.

It seems inaccurate to liken the government budget to a family. Among the economic actors which can be divided into family, corporation and government, the family depends on savings while the corporation’s main financial source is debts. Thus the family’s debts are usually not as much. The government budget is closer to that of corporation than the families’. Thus, an analogy of the government budget to that of family may sound as if the debts are just evil. Plus, such articles do not recognize the huge assets owned by the central government but criticize the debts alone. As the result, the articles follow the ordinary pattern by concluding that it is inevitable to raise the tax for reconstructing the finance.

Why are the press comments always on the same tone? It is because the newspaper reporters write their comments based on the explanatory documents distributed by the Ministry of Finance in advance. To rephrase, the reporters write the articles upon reading cribs and hearing lectures prepared by the bureaucrats.

Among 96.3420 trillion yen of the government budget FY2015, tax revenue is 54.5250 trillion, the other incomes are 4.9540 trillion yen and the government bonds amount to 36.8630 trillion yen.

By a metaphor of the budget to the family by converting a 1 trillion yen into \100,000, the family expenditure is \9.63 million, in which a father’s income is \5.45 million and a mother’s income is 0.5 million. The rest 3.69 million would be the debts. Because there are few families having that much debts in reality, readers may be astonished by the vast number of debts upon reading the articles.

Although the author doesn’t think it is appropriate to liken the government budget to the family, let me speak up one thing. As a matter of fact, the recently-weakened yen has brought about profits in the government’s foreign currency reserves: roughly \20 trillion. A metaphor of the fact will be the following.

The mother has used financial techniques behind the father’s back and made 200 million of the secret profits. But the father doesn’t know the fact and has lived in destitution, while the mother was smiling. Where did the 200 million yen go?