Second only in importance to the need to stabilise the situation at the Fukushima Daiichi nuclear power plant is the initiation of the recovery and reconstruction campaign in the broader Tohoku region. To that end, in late March senior members of the DPJ met with their counterparts in the opposition LDP and agreed on the broad outlines of the necessary fiscal measures. Having thus assured themselves that passage through parliament should not prove problematic, Mr Kan's cabinet then went forward with its own internal discussions and decided that the first supplementary budget-providing capital for the early relief and recovery efforts-should include allocations totaling somewhat more than ¥4trn (US$48.4bn). This includes money for payments to the Self-Defence Force personnel who are providing logistical assistance to the roughly 500,000 displaced people as well as funds for repairs of communications infrastructure, the transport of food and clothing, and other necessary items and services. The proposal was that the scheme would be financed mainly by taking ¥2.5trn from the national pension system and ¥800bn (US$9.8bn) from a previously established emergency fund, while at the same time eliminating several planned tax cuts and subsidies.

The first supplementary budget was submitted as scheduled to the Diet in late April and enacted in early May. The government has now turned its attention to devising a second budget that focuses less on relief and more on reconstruction. In the meantime the DPJ and the LDP have reportedly agreed that the appropriate sum should be approximately ¥15trn. The government has publicly suggested a somewhat smaller price tag of around ¥10trn, but Mr Kan recently, if infelicitously, acknowledged that it will in any case be big. The cabinet has not specified what measures will comprise the second scheme, but major investments in transport infrastructure and subsidies for new housing must inevitably be prominent themes. The government is also likely to spend a significant amount on energy infrastructure, as there have been profound disruptions to the national power grid, with rolling blackouts in Tokyo and other parts of the country that are likely to have a depressive effect on the national economy for many months. The authorities have already started composing plans to force manufacturers to cut their energy consumption by one-quarter over the summer, measured against the level in the year-earlier period, and households to reduce their usage by 15-20%. But these are only short-term initiatives. It will be interesting to see whether the bulk of the second scheme's energy budget is devoted to reopening the several nuclear reactors that have been shut down, or to other forms of power generation.