Taking Stock / Why Bibi can't sell the budget
The people are angry, Bibi didn't deliver the goods, the budget is unsatisfactory, it isn't "socially aware" or revolutionary at all, yuck, tarnished goods, no new message. Boo! We want last year's Bibi, we want a new budget!
What happened to Netanyahu? Last year the finance minister managed to sweep along quite a bit of the population, despite slamming them with decree after decree.
Is it because he folded before the port workers? Is it because everybody has come to understand that the great reform he promised will never happen?
Is it because he continues to oppress the poor and hasn't designed the 2005 budget to answer their needs? Is it because the public sector pork barrels remain sacrosanct? Is it because the government remains studded with thousands upon thousands of overpaid, unnecessary employees?
Maybe the disappointment with the 2005 budget is mainly because it's just a collation of old proposals tabled time and again over the years, only to be shelved for political reasons.
No, forget all that. You can't explain the surge of hostility to Bibi by micro-analyzing the components of the 2005 budget versus previous budgets.
Remember, it isn't as though Bibi gained his popularity last year by attacking those greasy public-sector pork barrels. All those government employees retiring with millions continued to sleep well at night last year, this year, and they'll apparently continue to do so.
Bibi capitulated to Uzi Cohen's gang, the hundreds of deputy-mayors at the powerful local authorities, last year. That was no innovation of 2004.
The finance minister also instituted painful cuts in welfare budgets last year. In fact, his predecessor, Silvan Shalom, had begun the process three years ago. It isn't further shaving at the disability and pension stipends that turned the tide against the Bibi.
True, the 2005 budget looks like a recycled version of various old moldy proposals, such as taxing the training funds, a proposal first raised by Avraham Shochat that helped opponents kill his tax reform.
But the budgets for 2003 and 2004 were also largely based on moldy old proposals. Thing is, everybody knows what has to be done, the question is who has the clout to get it done. Here is the real explanation for the dissatisfaction with Netanyahu and his 2005 budget. Five main reasons come to mind:
l Quakers no more: Netanyahu's other decrees came during a period of intense fear of financial crisis. Business leaders were quaking in their crocodile boots and hailed Bibi for halting the economic decline, and preventing their slide into bankruptcy.
Most of the public also understood and accepted that the threatening crisis was deadly serious, and that the situation would get far worse unless painful steps were taken.
Then came the U.S. loan guarantees that solved the government's financial problems; the Americans invaded Iraq and reduced the risk premium of the entire region; then exports shot up thanks to the U.S. economic resurgence; then Israeli tax revenues increased.
The fear began to dissipate. People forgot how bad things were a year or two ago. They forgot why we needed that economic root canal treatment.
Now the budget cuts look less like salvation for all and more like transferring wealth from A to B.
l Call that a show? You can't have a great drama unfold every year. Revolutions aren't annual events. Netanyahu's main mission now is to preserve his achievements from the last economic program he spearheaded; to restrain his colleagues in government and preserve the budget; to persuade cabinet to remain within the deficit target it set itself; and to reform the capital market.
It is all dull stuff, not the kind of thing you can package and sell to the public, to the cabinet, to the press. Keeping to expenditure goals? Maastricht boundaries? We want reform, we want reform! We want all-night negotiations followed by break of dawn press conferences! We want fireworks!
l Look at that stock market. When Bibi took over as finance minister a year and a half ago, everything was rock-bottom, except for interest rates and the Middle East risk premium, which were sky-high. Now Netanyahu can point at share prices as the ultimate proof of his success.
True, half a million people couldn't afford drugs or had to scale back food procurement in 2003, according to the Central Bureau of Statistics, and to them share prices really aren't relevant. But nobody hears their shaking voices anyway and the stock market rally remains the clearest sign of economic success. But the chart hasn't helped Bibi sell his case, that Israel still needs to clean up its economic act.
l Political shift. When Netanyahu presented his drastic economic program last year, the economy was breaking down and the prime minister understood he had to throw his weight behind his finance minister, by commission and omission. Now that grim mood has passed and the political situation has changed. Now politics supersedes economics. Netanyahu is having trouble finding political backing.
l You still here? In short, Bibi's biggest problem is that he stayed at the Finance Ministry too long. Last year he managed to do something no politician had ever done before - win esteem, create a good name for himself while serving as finance minister. But with each passing day of drudgery, he loses height.
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