However, some warn that the United States could still get it wrong, especially if the midterm elections produced a sharply divided political landscape.
“The danger is if the U.S. plunges into policy paralysis just like Japan in the 1990s,” said Shumpei Takemori, an economist at Keio University in Tokyo. “Ideological divides and political divides can make bold policy action impossible.”
In fact, some economists warn that the United States may be deeper into Japan-style stagnation than is widely realized. Simon Johnson, a former chief economist at theInternational Monetary Fund, estimates that the total output of the American economy this year will be no higher by his estimate than it was in 2006.
“We’ve already lost half a decade,” said Mr. Johnson, now a professor at theMassachusetts Institute of Technology.
Mr. Kato led a government advisory committee that concluded that the economy, which was then finally starting to rebound from the collapse of its 1980s land and stock bubbles, was healthy enough to raise the national consumption tax to 5 percent from 3 percent.
Aimed at reducing deficits, the tax increase instead quickly snuffed out the fragile recovery, pushing Japan to the brink of a financial meltdown and thrusting the nation deeper into the economic morass from which it has yet to emerge even today.