The ruling Democratic Party of Japan is assessing the damage from its defeat in the Upper House elections. The loss came less than two months after Naoto Kan was appointed prime minister.
Prime Minister Naoto Kan has apologized to party supporters for failing to meet expectations. His ruling Democratic Party of Japan needed to secure 54 Upper House seats to maintain a majority with its coalition partner, the People's New Party. The DPJ won 44 seats.
The prime minister says his proposed five percent sales tax increase was largely to blame for the loss. He says he failed to explain his policies clearly, and could not connect with voters.
The DPJ now faces an uphill battle in winning public support, and achieving its legislative goals. Sunday's defeat comes less than a year after the DPJ won a historic election that ended 50 years of rule by the Liberal Democrats.
The election also came just 40 days after Mr. Kan replaced Yukio Hatoyama as prime minister. Mr. Hatoyama stepped down after breaking a campaign promise to move a controversial American military base off the southern island of Okinawa.
The leadership change led to a surge in approval ratings for the new prime minister - but Mr. Kan's numbers began slipping after he proposed doubling the country's sales tax to deal with the massive public debt. The Japanese debt is now twice the country's nearly $5 trillion economy.
"The voters were ready to see increase in the consumption tax in Japan," said Columbia University Professor Gerald Curtis, a visiting fellow at the Tokyo Foundation. "But they weren't ready to accept it under Prime Minister Kan because he did not instill confidence in the public mind that he knew why he wanted to raise the consumption tax, how he was going to raise the consumption tax, what it would be used for."
A huge majority in the Lower House means the DPJ stays in power. But, Curtis says the loss of Upper House seats makes it difficult for the party to push through key policies, like implementing an unpopular agreement to relocate the base on Okinawa.
He says Sunday's defeat makes it unlikely any party will want to form a coalition with the DPJ.
"For this system to avoid total paralysis the DPJ has to work out agreements with opposition parties on specific pieces of legislation," Curtis said.
Curtis does not see that happening, which could lead to further political instability in Japan.
Mr. Kan also must convince his own party that he can steer the DPJ out of its current mess. The ruling party holds a leadership vote in September. This Sunday's election raises serious questions about whether Mr. Kan can survive that vote.