Yair Lapid's challenge
The Yesh Atid leader will be taking over the Finance Ministry in Israel's next government at a difficult time.
Yair Lapid will take over the Finance Ministry at a not-so-simple time. The state budget has a large overrun, and he will be forced to cut NIS 20 billion in the coming year and a half. He will also have to raise taxes by some NIS 10 billion.
These are not simple tasks, and they will require him to withstand waves of criticism from all directions - both from the opposition and from the general public that will be hurt by his decrees, including the middle class.
This will be a test of his character. If he does not try to placate the public in order to maintain his popularity, and if he accepts the enormous challenge and does what is right without cutting corners, he will prevent a crisis and ensure economic growth and stability.
To do this, he will have to consult with the professionals in the Finance Ministry - in particular, with the budget division staff - and solicit from them a number of alternatives.
All this will be difficult. There are no magic solutions when it comes to such great deficits and massive overspending. Lapid will be forced to cut the defense budget, child allowances, public sector wages, road and railroad infrastructure, settlements, and all government ministries. He will be forced to raise taxes - and it would be wise for him to eliminate tax breaks such as the value-added tax exemption on fruits and vegetables.
He will also have to implement a long list of reforms in order to allow for the renewal of economic growth. In this framework, it will be necessary to shake up the public sector and transform it into something more efficient by introducing flexible employment that allows managers to introduce new technologies that improve services for the general public and reduce bureaucracy for businesses.
In employment, he must restart the so-called welfare-to-work "Wisconsin Plan," bringing people back into the workforce who have been absent from it for years. He must also act to integrate the ultra-Orthodox and Arabs into the labor market, an area of hidden potential for economic growth.
To reduce the cost of living, it will be necessary to lower customs duties on food and dairy products, and to adopt European standards with the goal of allowing competition from imports; all this will force local manufacturers to become more efficient and lower prices. Additionally, he must deal with the high cost of housing, the large unions, and the concentration of wealth and economic power.
The tasks are great, and the challenge is enormous.