Taking Stock / Facts, figures and follies
March 29, 2005. That is the date on which the budget was approved this year, ergo, three months into the budget year. In the preceding two years, the budget had been approved on time, meaning, before the year began. The embarrassing delay this year was the first signal that the government has lost its resolve over macroeconomics in general, and the budget in particular.
3.4 percent. That is the real budget deficit deriving from the budget the Knesset approved Wednesday night. It is 0.4 percent above the deficit target set two years ago for 2005, based on which Israel received U.S. loan guarantees.
2 percent. That is the real increase in government spending this year, although when Benjamin Netanyahu took over as finance minister, the cabinet undertook to confine the increase to a real 1 percent. The 0.4 percent deviation in the deficit target and 1 percent addition to government expenditures are due to the then-unforeseen NIS 2.2 billion cost the treasury is now budgeting for disengaging Israel from Gaza. However, the real cost will be closer to NIS 7 billion.
NIS 290 million. That is the amount the government agreed to give ultra-Orthodox institutions. It is the sum on which much of the budget debate centered. It is the sum that Tommy Lapid turned into a flagship cause, and over which he stamped out of the government. It is the sum that after all the bells and whistles and charades, the ultra-Orthodox institutions will be getting, as they demanded.
NIS 225 million. That is the amount 400,000 old folk living on welfare will be receiving, under the agreement with the Labor Party. The party gleefully brandishes its coup for social benefits, but just forgets to mention that the money isn't going to the poorest of the aged, but to ones already receiving some form of income. It was the Finance Ministry, not the bleeding social consciences in Knesset, that initiated the idea of giving a quarter-billion shekels more to 200,000 old people who have no other resources.
NIS 625 million. That is what Lapid's Shinui party got, a bit for higher education, a bit for cultural institutions, a bit less for tax breaks for its favorite causes. The old and needy aren't invited to Shinui's soup kitchen.
NIS 700 million. That is the addition in 2005 alone to the payments the state makes to non-contributory pension schemes for public servants. Of that, NIS 300 million are for the defense establishment, a budget that is increasing by a terrifying 7 percent a year. Pension payments for these schemes have reached NIS 12 billion a year and are mushrooming, but the missiles are in the air, and nobody has a clue how to shoot them down.
A billion shekels. That's how much the treasury is supposed to be spending this year on raises for public servants, under its agreement two years ago with the Histadrut labor federation. The treasury's big mistake two years ago was limiting the agreement cutting civil service pay to two years. The treasury has bought itself another year by bringing forward "convalescence pay," but it won't be able to repeat the trick next year.
NIS 42 billion. That is the defense budget for 2005. It is the heaviest yoke on the economy's neck. The treasury intends to commence battle to slash defense spending, but only next year. Too bad the chief of staff is now Dan Halutz, a hardy soldier who knows what a number is. Fighting him will be twice as hard.
May 2. That is when the treasury will begin debates on the 2006 budget. What a starting point - its budget reserves will be entirely used up, the government will be nearing the end of its term, Netanyahu's battle with Sharon will be more open and ugly than ever, the stench of elections will be permeating the air, and the chance that the government will show some macroeconomic spine is vanishingly small.
The only comfort for the fools in the Knesset and government is that irresponsible budget deficits are all too common around the world, especially in the United States. George Bush is spearheading the most reckless budgetary policy America has seen in years.
The snag is that Israel already has a public debt of 110 percent of gross domestic product, double that of the countries we'd so love to emulate. We can't afford to wallow in fiscal irresponsibility.
But unfortunately, after being rescued from the brink of financial meltdown by the American guarantees, our leaders in Jerusalem don't understand that.
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