All around the world, countries left and right are declaring that the only way they can pay their bills is by going further into debt. Deficit spending has become economic commonplace and very few nations are actually solvent. As the deadline approaches for Japan to pass their latest budget, internal opposition has caused a deadlock in parliament which would ultimately cause Japan to run out of money. Rueters reports on the situation:
Japan’s government could run out of money by the end of October, halting all state spending including salaries, pensions and unemployment benefits, because of a standoff in parliament that has blocked a bill to finance the deficit.
The deficit financing bill, which would allow the government to sell bonds needed to fund almost half of the budget, has languished in parliament as the ruling Democratic Party tussles with opposition parties that can use their control of the upper house to reject legislation.
Japan’s budget for the current fiscal year that started in April totals 90.3 trillion yen.
The deficit financing bill allows Japan to sell 38.3 trillion yen in government bonds to fund the budget. The remainder is funded by tax revenue, non-tax revenue and income from bonds earmarked for public works projects.
Government expenditure is forecast to reach 43.9 trillion yen by the end of September, Azumi said.
Assuming that the deficit financing bill does not pass, the government would have only 46.1 trillion yen on hand, Azumi said. This means the government is sure to run out of money by the end of October, he said.
Japan already has the world’s largest debt burden at nearly twice the size of its $5 trillion economy, and a breakdown in fiscal spending could increase skepticism that politicians are losing their grip on public finances.