Japan’s down payment on reconstruction spending
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Steve Chiotakis: This week, Japan’s parliament approved its first big investment to offset damage from earthquake and tsunami. The relief package tops $49 billion. But that’s only a fraction of the hundreds of billions of dollars the disaster could cost the country and its economy.
Marketplace’s Scott Tong has more on the challenges ahead.
Scott Tong: What the Japanese people need right now is temporary housing. 130,000 people are waiting for it, hence this first quick batch of money just seven weeks post-disaster.
The rest of the funding can wait, says Marcus Noland at the Petersen Institute for International Economics.
Marcus Noland: It doesn’t make a lot of sense to frontload spending if one is not actually in a position to spend the money.
Not in a position, because the government has yet to prioritize longer-term spending. Everything from new schools to ports to train tracks. And financially, the country’s sagging under a public debt twice the size of its $5 trillion economy, and borrowing for reconstruction would just add to the tab.
Another option is tax hikes, and a new poll suggests the Japanese are willing to play.
Noland: A majority of people are saying raise taxes to pay for this. It is quite an extraordinary consensus behind shared sacrifice.
Aside from the financial problems, there’s the issue of that crippled nuclear plant at Fukushima, where 19 tons of water are still pumped in every hour to cool the damaged reactors.
I’m Scott Tong for Marketplace.