Launch of Takaichi Cabinet: Is New Administration a Turning Point for a New Era? / Fiscal Discipline Should Not be Disregarded

Editorial

16:58 JST, October 22, 2025

Japan’s first female prime minister has appeared. Will this be an opportunity to break through the sense of stagnation enveloping the nation? Even under the severe circumstances of a minority ruling bloc, she must advance politics and open up a new era.

Liberal Democratic Party President Sanae Takaichi has become Japan’s 104th prime minister. She is the 66th person to serve as prime minister and the first woman to hold the post.

While it has been noted that Japan is lagging in terms of women’s empowerment in society, many people may have been encouraged by Takaichi becoming the leader of Japan’s national politics. It is hoped that this major turning point in the nation’s politics will lead to the vitalization of the economy and society.

Hopes for 1st female prime minister

In forming her Cabinet, Takaichi appointed Shinjiro Koizumi as defense minister; Yoshimasa Hayashi as internal affairs and communications minister; and Toshimitsu Motegi as foreign minister. The three competed with Takaichi in the latest LDP presidential election. She had already appointed Takayuki Kobayashi, who also was a contender in the party leadership race, as LDP Policy Research Council chairperson.

The LDP and the Japan Innovation Party have formed a new coalition government, but there is no change in the situation of the ruling parties still lacking a majority of seats in both houses of the Diet. Takaichi has likely considered that unless she builds unity among all party members, she will not be able to manage the administration smoothly.

The Takaichi Cabinet faces nothing but urgent issues that cannot be postponed.

Economic growth has stalled, and wage increases have failed to keep pace with soaring prices. The decline in population and the birth rate shows no signs of stopping, fueling growing anxieties about the future.

It is crucial for the new Cabinet to put the Japanese economy on a growth track and establish sustained wage increases. It is necessary to rethink growth strategies that have not produced results and come up with new concrete measures.

Amid ongoing price increases for food and other products, it is quite natural that Takaichi is rushing to implement measures against high prices. However, there are concerns about the content of these measures. The ruling bloc intends to abolish the provisional gasoline tax rate. It also plans to consider reducing the consumption tax rate on food and beverages to zero for two years.

How will the massive tax revenue decrease caused by tax cuts be addressed? The consumption tax, in particular, is an indispensable financial resource for social security. This is not a topic that should be discussed solely from the perspective of measures against price increases.

Takaichi’s appointment of Satsuki Katayama, a proponent of aggressive fiscal policy, as finance minister is apparently aimed at expanding fiscal spending. Takaichi has stated that she will not hesitate to issue deficit-financing government bonds. But if she disregards fiscal discipline, there is a fear of losing the confidence of financial markets.

Takaichi has also created a new post to deal with measures for foreign nationals, putting Kimi Onoda, who has been appointed economic security minister, in charge of the new post.

Don’t fall into exclusionism

Various problems have arisen at tourist sites and elsewhere with the increase in the number of foreign workers and tourists coming to Japan.

It is necessary to formulate basic policies for coexistence, including how many foreigners to accept and what measures to prepare. The new administration must not fall into exclusionary thinking.

In order to pass budget proposals and bills, cooperation from opposition parties is essential.

To avoid repeating the mistakes of the administration of previous Prime Minister Shigeru Ishiba, which continued to be swayed by opposition parties, the Takaichi administration will have to face difficult administration management in which she cannot allow the opposition to seize the initiative in negotiations, even while seeking cooperation from them.

The opposition parties, too, must refrain from demanding tax cuts or cash handouts without securing any financial resources to back them. As Japan has entered an era of multiparty politics, they should recognize that their own responsibilities have grown heavier.

The first test for Takaichi, who has just assumed the post of the prime minister, will be of her diplomatic ability.

Takaichi will soon attend summit meetings related to the Association of Southeast Asian Nations in Malaysia and the Asia-Pacific Economic Cooperation summit in South Korea. She will meet with leaders of the participating countries on the sidelines of these summits.

Diplomatic skill also to be tested

How will Japan build cooperative relationships with neighboring countries? And how will the free trade system, which has been shaken by U.S. tariff measures, be rebuilt? It is crucial for Takaichi to convey her own vision based on a clear diplomatic strategy and work to build trust among leaders.

After the ASEAN meetings, U.S. President Donald Trump will visit Japan. Details for Japan’s investment in the United States that were agreed upon in the earlier bilateral tariff negotiations, and what Japan’s defense burden should be like, could be on the agenda for the Japan-U.S. summit.

Japan’s investment in the United States needs to be meant to benefit both countries.

Japan’s share of the costs for U.S. military bases in Japan greatly exceeds what other U.S. allies pay. Making note of this fact, it is important for the Japanese government to persistently explain to Trump that the Japan-U.S. alliance plays a vital role for security in the entire Asia-Pacific region.

Over the past year, Japan cannot be said to have made diplomatic efforts conducive to peace regarding Russia’s aggression against Ukraine or Israel’s attacks on the Palestinian territory of Gaza.

With the international order being shaken, Japan should clearly express its will regarding what kind of visions and actions it will take to build peace.

(From The Yomiuri Shimbun, Oct. 22, 2025)