Chief Cabinet Secretary of the Abe administration is trying to spin it by saying, "The report must have been based on misunderstanding." But as I'm skimming through the report written by three Asia specialists and one specialist on international trade and finance at the Congressional Research Service of the US government, it is well written, and the grasp of Japanese politics and economic issues looks solid.
From CRS Report for Congress Prepared for Members and Committees of Congress "Japan-U.S. Relations: Issues for Congress" (5/1/2013; emphasis is mine):
Japan is a significant partner for the United States in a number of foreign policy areas, particularly in terms of security priorities, from hedging against Chinese military modernization to countering threats from North Korea. The post-World War II U.S.-Japan alliance has long been an anchor of the U.S. security role in East Asia. The alliance facilitates the forward deployment of about 49,000 U.S. troops and other U.S. military assets based in Japan in the Asia-Pacific.
Japan has struggled to find political stability in the past seven years. Since 2007, six men have been prime minister, including the current premier Shinzo Abe, who also held the post in 2006-2007. His Liberal Democratic Party (LDP) returned to power in a landslide election in December 2012. Japan’s leaders face daunting tasks: an increasingly assertive China, a weak economy, and rebuilding from the devastating March 2011 earthquake, tsunami, and nuclear disaster. In recent years, opposition control of one chamber of parliament has paralyzed policymaking in Tokyo and
made U.S.-Japan relations difficult to manage despite overall shared national interests. Abe is unlikely to pursue controversial initiatives before the next national elections, for the Upper House of parliament (called the Diet) in July 2013. Perhaps most significantly, the United States could become directly involved in a military conflict between Japan and China over the Senkaku/Diaoyu islets in the East China Sea.
Comments and actions on controversial historical issues by Prime Minister Abe and his cabinet have raised concern that Tokyo could upset regional relations in ways that hurt U.S. interests. Abe is known as a strong nationalist. Abe’s approach to issues like the so-called “comfort women” sex slaves from the World War II era, history textbooks, visits to the Yasukuni Shrine that honors Japan’s war dead, and statements on a territorial dispute with South Korea will be closely monitored by Japan’s neighbors as well as the United States.
(From "Japan’s Foreign Policy and U.S.-Japan Relations", page 10)
It remains uncertain how Prime Minister Abe will fare as a steward of the relationship. On the one hand, he is known as a strong supporter of the U.S. alliance and promotes a number of security positions that align with the United States. He is an advocate of building relations with fellow democracies, particularly advancing security ties with Australia and India. On the other hand, Abe faces questions about his ability to steer foreign policy away from divisive regional issues that could hurt U.S. interests. (See section below for discussion.) In addition, domestic political divisions mean that major U.S. priorities such as Japan agreeing to the terms for the Trans-Pacific Partnership (see “Economic Issues” section for more) and allowing for more advanced defense cooperation (see “Alliance Issues” section for more) will be difficult to pursue. Abe’s approval ratings after his initial fourth months in office remained high, but action on many agenda items may be determined by the July 2013 Upper House election results.
(About "comfort women" - sex slaves, page 11)
Abe’s statements on the so-called “comfort women”—sex slaves used by the Japanese imperial military during its conquest and colonization of several Asian countries in the 1930s and 1940s—have been criticized by other regional powers and the U.S. House of Representatives in a 2007 resolution. Abe has suggested that his government might consider revising a 1993 official Japanese apology for its treatment of these women, a move that would be sure to degrade Tokyo’s relations with South Korea and other countries.
(About U.S. World-War II-Era Prisoners of War (POWs), page 14)
For decades, U.S. soldiers who were held captive by Imperial Japan during World War II have sought official apologies from the Japanese government for their treatment. A number of Members of Congress have supported these campaigns. The brutal conditions of Japanese POW camps have been widely documented.(24) In May 2009, Japanese Ambassador to the United States Ichiro Fujisaki attended the last convention of the American Defenders of Bataan and Corregidor to deliver a cabinet-approved apology for their suffering and abuse. In 2010, with the support and encouragement of the Obama Administration, the Japanese government financed a Japanese/American POW Friendship Program for former American POWs and their immediate family members to visit Japan, receive an apology from the sitting Foreign Minister and other Japanese Cabinet members, and travel to the sites of their POW camps. Annual trips were held in 2010, 2011, and 2012.(25) It is unclear whether the Abe government will continue the program. It is also unclear if Abe and other LDP politicians’ suggestions that past Japanese apologies should be reworded or retracted include the apologies to the U.S. POWs. In the 112th Congress, three resolutions—S.Res. 333, H.Res. 324, and H.Res. 333—were introduced thanking the government of Japan for its apology and for arranging the visitation program.26 The resolutions also encouraged the Japanese to do more for the U.S. POWs, including by continuing and expanding the visitation programs as well as its World War II education efforts. They also called for Japanese companies to apologize for their or their predecessor firms’ use of un- or inadequately compensated forced prison laborers during the war.
I don't think many Japanese are even aware of former American POWs... The Abe administration certainly wants to "reword" what took place in the World War II, starting with the definition of "aggression".
(About "Japanese politics", page 32)
The December 2012 Elections: A Landslide Without a Mandate for the LDP
Since 2007, Japanese politics has been plagued by in stability. Six men have been prime minister, including the current occupant of the post, Shinzo Abe (born in 1954), who was also prime minister for a 12-month period from 2006-2007. The LDP’s dominant victory in the December 2012 Lower House elections swept the party back into power. However, in the view of most observers—and even many in the LDP—the results were more attributable to voters’ desire to eject the Democratic Party of Japan (DPJ) from power rather than enthusiasm for the LDP or its policy proposals.(51) Indeed, by some measures, the LDP garnered less support than in the last Lower House election, in 2009. Nonetheless, it was able to secure a commanding number of seats because of one of the lowest turnouts (59%) in the post-World War II era and the splitting of the anti-LDP vote among the DPJ and a number of new or relatively new parties.
The Abe administration, and Prime Minister Abe himself, has been craving the love and attention from the US administration. After visiting President Obama, Abe was heard complaining to his aides, "I traveled great distance to see him (President Obama), and but didn't even smile at me."
Instead, in this report, I sense a puzzlement, almost a slight dismay - of all nations, why does Japan under this prime minister have to be the US military ally and economic partner?
As usual, some of the response I get on Japanese Twitter is rabidly anti-US, casting Japan as "victim"; it's all because of China, Korea, or the US that Japan and the Japanese suffer, and they are there to wrestle money from Japan.
Like worrying that Thais will re-export expensive tomatoes and asparagus from Fukushima back to Japan and the Japanese will suffer.