The Bottom Line / Don't panic - it's only the economy
Another reform: "The finance minister and I agreed two days ago that we will initiate a tax reform that will ease the burden on your sector, too," Prime Minister Ariel Sharon told an electronics industry forum yesterday.
Another reform: "The finance minister and I agreed two days ago that we will initiate a tax reform that will ease the burden on your sector, too," Prime Minister Ariel Sharon told an electronics industry forum yesterday, hoping for a round of applause. But he failed to get much encouragement, because the reform means imposing taxes on capital gains, while reducing income taxes on the low and middle income earners. Which didn't impress his audience because, in fact, they would be hit by tax increases, being among the "rich" earning above NIS 30,000 a month.
Wage calculations: Executives and directors of the major banks have announced a cut in their pay, as the banks have suffered such a difficult year. But they were quite worried that should they lose their jobs in the meantime, their compensation would be commensurate with the recently-cut wages, and that would be truly painful. So they decided that their self-imposed cuts would not affect their pensions or advanced training funds (keren hishtalmut) benefits. At banks Leumi and United Mizrahi, the top bosses decided to donate the cuts to good causes, thereby enjoying a 35 percent tax credit, which makes the austerity measure that little bit easier.
America: When we have no state budget, life carries on almost as normal. Government offices do their work, and their money comes in according to the previous year's spending. In the U.S., they treat non-passage of the budget much more seriously. Over there, when there's no budget, there's no money. All administration activity shudders to a halt, workers do not get paid, so they stay at home, and only the armed forces and some hospitals carry on the good work.
In such a situation, there is enormous pressure from below, and the budget gets passed. So it happened to President Clinton in 1997. But here, where nothing is urgent and there is no real pressure, we simply hang on in there for a period of uncertainty and damage to the economy, despite Sharon's promise yesterday that the budget will be passed within days.
Net damage: The need to freeze the Negev Law and the Large Families Law opened Shimon Peres' eyes, sparking concern about the breakup of the government. So he came up with a typical solution: to ask the Americans to postpone our debt repayment of $500 million, so that we have some extra cash for the Negev benefits. Peres told Finance Minister Silvan Shalom, who was all ears, but the treasury staff brought him down to earth. Just publicizing the idea had damaged the economy. It's like a grocer hanging up a sign saying he cannot meet his debt payments, but he's expecting his suppliers to grant credit in any case.
It is also clear that there is no way the U.S. Congress would permit a debt deferral, because who could explain there that Israel needs more money to increase its child allowances when in America, they have no such thing. And who can explain why we should take money from the U.S. taxpayer (and there they also have poverty and problems) in order to boost the take-home pay of Yaakov Terner, Pini Badash and Avishai Bravermann (all Negev residents).