"That is a Greek decision," the finance minister fumed this week after the Knesset voted overwhelmingly to leave the retirement age for women at 62. Yuval Steinitz is correct. The decision is indeed reminiscent of the Greek system of distributing benefits, gifts and grants to the public - until that system collapsed.
The Greek parliament was famous for its kindheartedness. It increased the number of vacation days, decreased the number of working hours, raised salaries and introduced early retirement plans. The only problem was that one day, it turned out Greece's deficit had gotten out of control and its debt was sky high. It was suddenly clear to everyone that Greece would not be able to pay its debts and was facing bankruptcy; that it had to make cruel cuts to its welfare stipends, its health system and its salaries; and that tens of thousands of people would have to be fired.
Now it is true that one bad decision does not cause a downfall, but if the Knesset continues to dance the sirtaki, play the bouzouki and sip ouzo while passing another few populist laws, we too will have a crisis of the Greek kind. And then who will be declared guilty? Not the 77 good Knesset members who voted against raising the retirement age for women. The guilt will be borne by Finance Minister Yuval Steinitz and Prime Minister Benjamin Netanyahu.
Since those two are well aware of this, they have decided to stand like a fortified wall against any attempt to bust the budget, regardless of whether the attempt is made by Defense Minister Ehud Barak, Likud MK Haim Katz or Labor Party leader Shelly Yachimovich. Their first test will be the 2012 budget.
It is already clear that if nothing is done, the coming year's deficit will exceed the planned deficit by some NIS 9 billion. It will be 3 percent of gross domestic product rather than 2 percent. That is dangerous, because growth next year will stand at a mere 2.8 percent, which means that public debt will rise as a proportion of GDP. That is bad news in a world where credit rating companies meticulously examine the size of every country's debt.
We have reached this unfortunate state of affairs because of the spending sprees and inflated budgets of 2011 and 2012. The head of the Finance Ministry's budget division at the time, Udi Nissan, forgot his position on the chessboard. Every chess piece has a specific role and specific ways of moving. A knight cannot be a bishop and a bishop cannot be a queen. And the role of the head of the budget division is to be the evil treasurer who says "I don't have anything to give," not a Mother Teresa who smiles and says, "Here you are."
The problem is that Steinitz gave Nissan full backing, out of a mistaken conception that it was possible to increase expenses and get away with it. Today, Steinitz understands his mistake, and he is extremely worried about the condition of the 2012 budget. On top of the planned expenditures, there are expected to be additional expenses of NIS 2 billion to NIS 3 billion because of several items that got completely out of control, such as the wage agreement with the doctors, raising the minimum wage, private member's bills in the Knesset and a number of expensive government decisions. And on the revenue side, tax collection is expected to drop sharply as a result of the slowing economy.
Given the sensitive global situation, we can no longer sit with folded hands. The finance minister and the current head of the budget division, Gal Hershkowitz, have to slash NIS 9 billion from the budget. That is not simple, but it is possible. It is nothing compared with the deep cuts being made in Europe these days.
As part of these cutbacks, there will be no choice but to freeze the plan for free education for 3- and 4-year olds and a long school day for those aged 3 to 9. The government will likewise be forced to delay projects, reduce manpower and cut the purchasing budgets of all government offices, including a deep cut in the defense budget. Another tax increase is not desirable. It will lead to even more of a slowdown.
The problem is that the global crisis will not end in a year. Therefore, it is necessary to start preparing now for the difficult fiscal year of 2013. Then too, cutbacks and unpleasant decrees will be necessary.
It is true that it is much more pleasant to dance the sirtaki, play the bouzouki and sip ouzo. But we don't want to spend our days like Zorba the Greek and then wake up the next day with a bad hangover and a splitting headache from all those "Greek decisions."
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