SCENARIOS: Sagging PM popularity threatens Japan ruling bloc

By Linda Sieg

TOKYO (Reuters) - In another sign of unpopular Japanese Prime Minister Taro Aso's fading clout as he struggles with a recession ahead of an election the ruling bloc could well lose, an ex-cabinet minister left the ruling Liberal Democratic Party (LDP) Tuesday in protest against his policies.

Below are some scenarios for how the political story could play out over coming months.

ASO'S BEST BET?

Aso has all but ruled out an early snap election, saying that passing a supplementary budget for the current fiscal year to March 31 and the budget for 2009/10 must come first.

Analysts say he hopes to push the budgets and bills needed to implement the spending through parliament despite anticipated delaying tactics by opposition parties, which control the upper house, and then call an election in late April or May.

Budgets automatically become law 30 days after approval by the lower house even without a vote by the upper chamber, but related bills, if rejected there, would need to be approved by a two-thirds majority of the lower house to take effect.

The LDP and its junior coalition partner the New Komeito currently hold two-thirds of the lower house's 480 seats, so if Aso can control internal squabbling in the LDP and keep the New Komeito on board the budget bills can be enacted, clearing the way for him to call the election.

INDECISION AND DELAY

Even if Aso manages to get the budget bills passed, he might decide not to call an election if his support rates, now below 20 percent, have not recovered to at least 30 percent.

In that case, he -- or his successor, if the LDP opts to replace him before an election -- might wait until closer to the expiry of lower house lawmakers' four-year terms on September 10.

Typically, an election must be held within 30 days of the next-to-last day of the term, so in this case the election date would fall between August 11-September 9. If, however, the premier opts to dissolve the lower house on the last day of the lawmakers' terms, the poll could be held as late as October 20.

ELECTION DEAL

Aso's grip on the LDP, which has only had one very brief spell out of power in its 53-year history, is declining in tandem with his sagging popularity.

One high-profile LDP lawmaker, former financial services minister Yoshimi Watanabe, submitted his resignation from the party after demands, including the withdrawal of an unpopular plan for 2 trillion yen ($21.5 billion) in payouts to individuals, were not met. Funding for the payouts is in the extra budget for 2009/10 that Aso wants to get through the lower house later Tuesday.

If 17 or more ruling party lawmakers vote with the opposition against bills needed to implement the budget, the ruling bloc would fall short of the two-thirds majority needed to enact them, the LDP would effectively split, and Aso might have to resign.