Even Benjamin Netanyahu would like to forget the budget bluff of 2004. The reserve had already been spent to the last penny. Nine hundred million shekels were distributed to the Likud ministers of education, health, and industry. And NIS 450 million were allocated to meet demands by Shinui, the National Religious Party, and the National Union.
The Knesset Finance Committee made life easy for itself when it abolished certain income elements to the tune of NIS 700 million. Everybody knew that the huge slice into the local authorities' budget (NIS 2.8 billion over two years), and the budget cuts in the Defense Ministry were unreasonable.
That's how the 2004 budget, which the Knesset passed at the beginning of January, became one big bluff.
Netanyahu and his team won't win any management prizes, either. The passing of the budget was handled amateurishly by senior treasury officials. Netanyahu was ill with the flu part of the time, and then he took an unnecessary trip to Romania. Instead of starting the process on time, closing deals with ministers and MKs, and finishing up everything by December 31, the treasury started too late and was disorganized and showed weakness to ministers and MKs.
But Netanyahu is not a man to admit that things went wrong. He told Haaretz that there was no choice but to "starve" the two giants - the local authorities and the Defense Ministry - as only this way could there be change and recovery. So their budgets were severely slashed. Now comes a certain redressing, together with important reforms and recovery plans. Whoever wants to believe this is invited to do so. The 2004 bluff budget will also gain notoriety because of the reserve trick, a first in the history of the state. In addition to the general reserve, Ori Yogev, responsible for budgets in the treasury, and Netanyahu concealed another reserve under the name "special reserve for protecting the deficit." This hidden reserve was distributed among all government ministries as a permanent percentage of their budgets. The pair planned to use this reserve to provide the budget additions to the local authorities and the Defense Ministry. However, because of poor management, the special reserve did not suffice. This reserve stands at NIS 1.5 billion, and the treasury is taking NIS 1.0 billion from it. So the secret storehouse still holds half a billion shekels (perhaps for the fence?).
We still remember that Yogev said the general reserve had been completely exhausted when NIS 1.3 billion were subtracted from it. If that is so, then how can it now provide NIS 1.44 billion? Has something been created from nothing? Or, as usual, the treasury is tricking us with numbers.
It is also hard to boast about the flat 6 percent cut to all ministries. There are lean ministries, whose budgets should not be touched. There are important infrastructure ministries that should also remain unscathed. But there are fat ministries with unnecessary departments and strange activities that should be abolished. Therefore, it is not right to cut all the budgets across the board at the same rate. It is bad management.
On the other hand, Netanyahu's obstinacy in not increasing the expenditures article in the budget is laudable, because if there is one thing that clearly stunts growth, it is an increase in government spending when the economy is beginning a process of recovery. If Netanyahu had given in to the ministers, he would have lowered the boom on the private sector, which is now struggling to raise its head. He did well to distribute the income from taxes ahead of time, thus preventing the ministers from getting their hands on the money. The ministers may now love him less, but the economic outcome will be better. The fat man (the public sector) will be less obese, and the thin man (the business sector) a bit more muscular.
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