The Japanese Cabinet today fixed austere limits on all government spending next year and scaled down significantly defense officials' requests for an increase in military expenditures.
Japan's Defense Agency had sought an increase of about 11 percent in this year's budget, with some officials contending it was necessary to satisfy the U.S. request for Japan to expand its defense capability in the Pacific.
After today's Cabinet meeting, however, officials told the press that defense spending would not rise more than 7.5 percent in next year's budget.
The Cabinet decision was the first action affecting defense expenditures since the U.S.-Japan summit meeting last month where Prime Minister Zenko Suzuki promised that his country would make "greater efforts" to improve its defense capability.
His pledge had generated optimism in the Reagan administration, which hailed it as a new and important Japanese commitment. However, a few days after meeting with Reagan, Suzuki stressed here that he had made no new defense commitments.
If the 7.5 percent increase estimate holds true -- and it could be reduced even lower this year -- it would appear that the Defense Agency would find it difficult to make any significant expansion.
The Reagan administration's first reaction will come next week at working-level meetings in Hawaii where U.S. and Japanese defense officials are to discuss details of their common defense plans.
Unlike Pentagon officials in the Carter administration, Reagan aides have shied away from using percentage guidelines to judge Japan's defense contribution, although they have made it clear they want a bigger role from this country in patrolling the North Pacific.
The new policy in Washington is to stress the character, not the numbers, of Japan's military contribution, hoping that this country would concentrate more on air and sea defense in the Pacific and less on ground forces to defend the homeland.
The fact that any financial limit was set at all was a setback for those defense officials here who had wanted to push for a more expansive role. They had contended, before today's meeting, that a ceiling now would sharply restrict the defense budget even before the Hawaii meetings begin next week.
"We are afraid this would reduce the meaning of the talks," said one government official last week when the question of setting fiscal limits was still under discussion.
These officials had also argued that any increase of less than 10 percent would not satisfy American officials. By the computations they use, anything under 10 percent would actually result next year in a smaller commitment of Japan's gross national product to defense spending.
Japan now spends .91 percent of its GNP on defense, far less than U.S. and European levels. If the 7.5 percent ceiling is actually held to, that proportion would remain about the same or even decline, depending on the size of Japan's GNP next year.
It is generally believed here that the events of the past month have reduced the influence of those pushing for significantly bigger defense budgets. Under public pressure, Suzuki was forced to retreat from the generalized promises made during the summit meeting with Reagan, forcing resignation of his foreign minister.
The anti-military mood has also been sharpened by the still unfolding controversy over disclosures that U.S. warships have routinely carried nuclear arms into this country's ports for 21 years. The Suzuki government, which is still trying to claim no such weapons are brought in, is on the defensive in the face of strong attacks by opposition parties and antinuclear movements.
The government also is under fiscal pressure to trim spending across the board to reduce its dependence on deficit financing, a goal strongly proclaimed by Suzuki. The Ministry of Finance has been given broad authority to hold down spending for the year beginning next April and is cutting to the bone in most departments.
Defense and a few other agencies were exempted from a general rule holding government spending to near zero growth in the coming year.