After a tremendous delay, Finance Minister Silvan Shalom reached the conclusion that our economic situation is perilous, that the budget deficit in 2002 will be too high and that the international credit rating agencies are apt to bring Israel's rating down a peg or two - if nothing is done.
Just one week ago Shalom said that there is no chance of passing any budget cuts through the Knesset now, so he will have to trim the budget after the current draft has been passed. And then - surprise, surprise - suddenly, today, everything is possible. Yesterday Shalom met with Prime Minister Ariel Sharon to decide how much could be trimmed from the budget to present to the Knesset Finance Committee next week.
So why is Shalom so angry at those who told him this before? And more so, the same people claimed four months ago that growth in 2002 will not be 4 percent but only 2 percent, and Shalom was angry with them then. He and his director general continued to claim that a growth of 4 percent next year was possible "and you don't change growth forecasts every month." But just this week they declared a new growth target for 2002 of 2 percent.
Treasury director general Ohad Marani should do a bit of soul-searching today. Did he advise the minister according to the best of his economic judgment, or according to what the minister wanted to hear?
Now at least NIS 5 billion has to be cut from the government budget, and in order to do this, the minister must declare now today that first and foremost he will cancel (without delay) the Negev Law which grants tax breaks to every resident of the south, rich and poor alike. Only then could Shalom claim from Shas the cancelation of the law that hands out larger child allowances for the fifth child onward and the other populist laws.
If he already agrees to a deficit of 3 percent of gross domestic product (in order to save cutting another NIS 2.5 billion), then he will also reap the stinking fruit of such a move, and be thrown out of town. So he should stand firm on 2.4 percent of GDP, and not budge an inch.
Yesterday the poverty report came out with some worrying statistics. In 2000 1.16 million Israelis lived below the poverty line, an increase of 30,000 on 1999. MK Amir Peretz (and others) hurried to declare that any move by the government to cut national insurance payments or income supplement pay or the fifth child allowance is completely out of the question. So what should the government cut then if not transfer payments? Infrastructure? Education? Health? A billion from the Religious Affairs Ministry that funds yeshivas?
Shutting the Religious Affairs Ministry would be the correct thing to do, but so would trimming the transfer payments, because they have ballooned in the past decade, teaching thousands how to live (poorly) without working. On the flip side, though, spending on education and professional training should be encouraged, because only in these lies the long-term help for the poor.
Education is the name of the game in the modern world, and only this (in the developing towns and neighborhoods) will bring new jobs and help bridge the gap and wipe out poverty in Israeli society.
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