This article introduces Hideo Tamura’s economic commentary published in the Sankei Shimbun on May 9, 2026.
It criticizes the dogma of Japan’s primary-balance surplus target, which has long contributed to economic stagnation, and asks whether the Takaichi administration can shift decisively toward fiscal-led economic revitalization.

The following is from an article published in the Sankei Shimbun on May 9.
It is essential reading for every Japanese citizen.
The Dogma of the PB Surplus Target.
Can the Takaichi Administration Shift to a Fiscal-Led Policy Line?
Hideo Tamura’s Economic Answer.
May 9, 2026.
For many years, the Japanese economy has been bound by a dogma.
That dogma is the primary-balance surplus target, which asserts that policy expenditures in national finance should remain within the scope of tax revenues.
Among the major countries, Japan alone upholds this target.
The result has been a frightening economic stagnation.
The Sanae Takaichi administration seeks to revise or abolish it, but the Ministry of Finance and the established media stand in its way as forces of resistance.
The arena for the struggle over the PB target is the Council on Economic and Fiscal Policy, chaired by Prime Minister Takaichi, which discusses the Basic Policy on Economic and Fiscal Management and Reform, commonly known as the Basic Policy.
Finance Ministry bureaucrats work to insert the PB surplus target into that document and have it approved by the Cabinet.
They then brandish it as they assess the budget requests of each ministry and agency, and compile the government budget proposal at the end of the year.
The PB surplus target itself was introduced in fiscal 1997 by the Ryutaro Hashimoto administration and became fixed in place through the Basic Policy that began in fiscal 2001.
Even the fiscal 2026 budget under the Takaichi administration, which took office last October, was forced to follow the Basic Policy of the previous Shigeru Ishiba administration.
If all tax revenues drawn from the private sector are not returned to the private sector through policy expenditures, domestic demand shrinks and the economy is pushed downward.
As a result, the government and ruling parties have made so-called economic measures through large supplementary budgets an annual autumn ritual.
Large supplementary budgets are makeshift handouts, and private investment appetite does not return.
While tax revenues decline, fiscal expenditures alone stand out, causing only the PB deficit and outstanding government debt to swell.
Using that as a reason, Finance Ministry bureaucrats have forced successive administrations to cut policy spending and accept consumption-tax hikes.
Because of weak demand, real wages have fallen, and the working generation has become increasingly impoverished.
◎Is Withdrawing the PB Target an Abandonment of Fiscal Discipline?
Can the Takaichi administration remove the PB surplus target?
The forces of resistance have prepared several killing phrases.
What the established media report most aggressively is the argument that, if the PB target disappears, financial markets will regard it as an abandonment of fiscal discipline, confidence in government bonds will be lost, and interest payments on government debt will increase.
Neither the prime minister nor the young Liberal Democratic Party lawmakers who support her can ignore this.
That is precisely why the phrase “responsible” has been attached to active fiscal policy.
The prime minister herself has publicly mentioned a compromise plan to shift the PB target from a single-year target to a multi-year target, but her language lacks clarity.
To begin with, what effect does a PB surplus have?
If a country lacks a PB target, does that mean its economy cannot grow?
Rather, the target closes off the path to growth.
Would it not increase fiscal flexibility and bring about economic revitalization if the PB target were separated from fundamental national policy?
◎The United States and China Expand Spending Without Economic Collapse.
The graph tracks the ratio of PB deficits to nominal gross domestic product, GDP, and the consumer price index for Japan, the United States, and China, the latter two of which have no PB target.
The original data are based on International Monetary Fund, IMF, forecasts.
The PB deficit-to-GDP ratio expanded sharply in Japan, the United States, and China in 2020 due to large-scale fiscal mobilization in response to the coronavirus pandemic.
However, from 2021 onward, Japan sharply reduced that ratio.
This was because Japan returned to a fiscal-austerity path in accordance with the PB surplus target.
The United States has also gradually reduced its PB deficit-to-GDP ratio, but in 2026 it remains higher than before the pandemic.
The Trump administration, which returned to power in 2025, not only introduced major tax cuts but also increased defense spending.
In the January–March quarter of this year, the U.S. real economic growth rate continued to expand at an annualized 2 percent from the previous quarter.
Investment related to artificial intelligence, AI, and data centers is active, and foreign investment and lending into the United States are also increasing.
Even after the attack on Iran at the end of February, U.S. financial markets have not been shaken.
The Xi Jinping administration in China, amid the still-bottomless collapse of the real-estate bubble that began in the second half of 2021, has adopted large government subsidy policies to encourage investment in electric vehicles, EVs, advanced semiconductors, and AI.
As a result, China’s PB deficit-to-GDP ratio has been on an increasing trend since 2022.
Regarding China’s GDP, the IMF relies on figures announced by the Chinese authorities, even though those figures are suspected of being inflated.
The PB deficit ratio relative to China’s true GDP is likely even larger.
Even so, EVs are increasing their share of the global market, and AI is also showing the capability to compete with the United States.
Although China is full of regulations, there is no sign that the expansion of the PB deficit is causing financial instability in China.
Today, what determines the PB deficit-to-GDP ratio is inflation.
Japan’s striking reduction in the PB deficit-to-GDP ratio has been greatly helped by an increase in nominal GDP and tax revenues that reflect prices pushed upward by energy costs.
The foundation for this was built by active fiscal policy.
The uniform cash payment of 100,000 yen in 2020 and other measures led the post-coronavirus economic recovery.
From all of this, the PB surplus target is, by any reasonable view, nothing but an obstacle to the national economy.
Should the Takaichi administration not break the spell of the PB surplus target and take a strong step toward fiscal-led economic revitalization?
Editorial writer.