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Japan ruling party passes stimulus plan

by Jay Alabaster
| November 28, 2010 8:00 PM

TOKYO - Japan's beleaguered ruling party on Friday passed a new $61 billion stimulus package that aims to create jobs and revive the country's faltering economic recovery.

The new stimulus includes a wide range of measures, including aid for small business and regional economies, but Prime Minister Naoto Kan has repeatedly said the main focus is jobs.

"Employment first, employment second, employment third," became Kan's rallying cry for the package, which has faced a tough route through a divided parliament.

Japan's economic recovery is slipping, with the unemployment rate still high by local standards at around 5 percent. Deflation continues to weigh down growth - government figures released Friday showed consumer prices have fallen for 20 straight months - while a strong yen cuts into profits from the country's exports.

But a weakened Kan has struggled to keep the focus on the economy in a venomous political environment. His approval ratings have declined in recent voter polls, with wide dissatisfaction over the government's handling of diplomatic spats with China and Russia.

On Friday, opposition parties that control the upper house of parliament rejected an extra budget to fund the new stimulus. However, the ruling Democrats control the more powerful lower house and passed the budget there late Friday, overruling the upper house.

The upper house is then expected to pass censure motions against two prominent Cabinet members.

Earlier this week the justice minister was forced to resign over jokes he made about dodging parliamentary questions, after the opposition threatened to boycott deliberations on the stimulus plan if he didn't quit.

An extra budget of 4.4 trillion yen ($53 billion) was passed for the stimulus, the remainder coming from cost cuts and frontloading of public works projects, an official at the lower house said.

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