The cabinet approved a delay, through November, of 5 trillion yen ($63 billion) in public spending, most of that in tax grants for local governments and aid for universities. It was the first time since World War II that the government had delayed scheduled spending in the middle of a fiscal year, government officials said. Spending on health care, social welfare, the police and firefighters and other vital services were not affected. The ruling Democratic Party had tried to head off a delay by trying to secure support for a bond issuance bill that would finance about 40 percent of its 92 trillion yen ($117 billion) budget for this fiscal year. But a spat with the main opposition Liberal Democratic Party over the timing of the next general election — one in which the Democrats were expected to fare poorly — prevented that bill from passing before the end of Parliament’s current session on Saturday. The government was expected to seek a fresh compromise at a special parliamentary session, probably in October. Addressing the nation Friday, Prime Minister Yoshihiko Noda lashed out at the opposition for holding public services hostage. “We are being forced to delay spending to the last minute while trying to protect public livelihoods,” Mr. Noda said. “I hope the opposition shares this sense of crisis.” Japan has been forced to rely more on government bonds to finance its spending as a weak economy depresses tax revenue and social welfare expenditures surge to support a rapidly aging population. Servicing its public debt — which is more than twice the size of its economy — has also pressured Japan’s finances, though the finance ministry says it can meet its debt obligations without the bond issuance bill. But Japan’s central bank has already been forced to act, pumping about 2 trillion yen ($25 billion) into the market to meet an expected jump in demand as local governments face delays in getting their tax grants. The delay also cast a shadow over Japan’s economic recovery from its earthquake and tsunami disaster. Some economists warned that the economy could shrink in the third quarter as the slowing global economy took a toll on exports and as subsidies on fuel-efficient vehicles ended.
