Even as the election campaign was underway, Vice-Finance Minister Nobuaki Usui and Mori declared that additional funds may be used for further efforts to stimulate the economy. Interest payments on the national debt now devour 65 percent of tax receipts. And yet, in an indication of the depth of the crisis, the historically unprecedented pump-priming has failed to revive the economy. In the last quarter of 1999 the economy contracted by 1.41 percent. By March this year, official unemployment had grown to 3.49 million or 4.9 percent of the work force.
Most economic commentators estimate that the official figure understates the situation by half.
Major companies such as Nissan and Mazda have been forced into effective mergers with US and European transnationals and have announced mass job cuts and factory closures to put their balance sheets in order. The public works programs are widely perceived to have benefited construction and steel companies that are closely associated with the LDP and among the least efficient of the Japanese corporations. Much of the government spending has been directed toward rural areas where the LDP has its electoral base. There are growing demands in some Japanese and international corporate circles for a change of policy that would open the economy to greater foreign competition and investment, raise interest rates, allow inefficient banks and companies to go to the wall and bring government debt under control. Among the prime targets of criticism are agricultural subsidies that consume 4 percent of the budget.