Spending Without Taxation ─ Filp and the Politics of Public Finance in Japan

Park (political science, Baruch College) conducts an analysis of Japan's use of the Fiscal Investment Loan Program (FILP) in the postwar years. He argues that this financial mechanism enabled the ruling Liberal Democratic Party to maintain low taxes and a neoclassical fiscal policy based on low budget spending accompanied by pork barrel spending. This commitment to budget constraint enabled by FILP delivered economic benefits and was central to the postwar political bargain of budget restraint without sacrificing spending, he argues, but came at the cost of heavy intervention in finance, deferred fiscal burden, and the political challenge of reforming the program once the quality of its investments and loans deteriorated by the 1980s because the LDP had exploited the program too much in order to balance competing interests between fiscal hawks and pork-barrel politicians in order to maintain political power. Annotation c2011 Book News, Inc., Portland, OR (booknews.com)