Nakasone Critics Assail Budget Controls

Spurred by Secretary of State George P. Shultz’s request that Japan stimulate demand at home, critics of Prime Minister Yasuhiro Nakasone on Monday attacked Nakasone’s policy of stringent budget controls, which have been in effect since 1980.

Toshio Komoto, state minister in charge of external economic affairs, declared at a meeting of Cabinet ministers and leaders of the ruling Liberal Democratic Party that “the time has arrived for a judgment.”

Using Shultz’s argument to Foreign Minister Shintaro Abe, Komoto urged Nakasone to announce his intention to adopt dramatic measures to expand domestic demand and implement them in next year’s budget. Komoto said Nakasone should make the announcement at the Bonn summit meeting of seven industrialized nations May 2-4.

He also said the Cabinet should “tackle positively” a U.S. request that Japan make an “emergency” purchase of 10 million tons of American grain for use as food aid. The proposal was made secretly by U.S. officials in March and reiterated to Abe during his weekend Washington visit in the hope of helping American farmers and reducing the U.S. trade deficit with Japan, which last year reached $36.9 billion.

Komoto said that such a purchase would cost about $1.2 billion to $1.3 billion, which he characterized as “not that much of a burden.”

Kiichi Miyazawa, head of the ruling party’s general affairs council, said a package of “market-opening” measures announced last Tuesday would not be enough to ease U.S.-Japanese trade friction. He, too, called for measures to stimulate the domestic economy when next year’s budget is formed later this year.

Miyazawa said Nakasone’s declared policy of “encouraging the vitality of private industry” through government deregulation “has its limit.” Susumu Nikaido, vice president of the ruling party, also called for a change to demand-stimulating policies.

Komoto, Miyazawa and Nikaido all have expressed hopes to unseat or succeed Nakasone, whose term as president of the Liberal Democratic Party expires in November, 1986. The head of the ruling party becomes prime minister almost automatically.

Nakasone, however, declared that measures announced last Tuesday to open Japan’s markets should be carried out and economic conditions in the first half of the fiscal year (through September) should be examined before efforts are made to stimulate the domestic economy.

The prime minister made no comment on Komoto’s appeal to heed the American request to buy 10 million tons of grain. Abe and officials of the Agriculture Ministry earlier expressed negative views.

Masayuki Fujio, the ruling party’s policy board chairman, criticized the burst of support for Shultz’s proposal to stimulate domestic demand. “Even if Japan alone becomes a scapegoat, this problem won’t be solved,” he said. “What is this penchant for chasing after everything the United States and Europe says?”

Abe reported to Nakasone that the announcement of last Tuesday’s “market-opening package” had “nearly brought to an end” friction with the Reagan Administration. He warned, however, that sentiment against Japan in the U.S. Congress was “far worse than I had imagined.”