The Bottom Line / Return to planet earth
After relentless public pressure, Finance Minister Silvan Shalom and his director general finally admit that the economy next year will grow by less than 4 percent and revenue from taxes will be much lower than the budget states.
About turn. After relentless public pressure, Finance Minister Silvan Shalom and his director general finally caved in and announced what the rest of us have known for some time. They admit the economy next year will grow by less than 4 percent, and revenue from taxes will be much lower than the budget states, and the budget deficit will be greater than 2.4 percent of GDP, and there is a good chance Israel's credit rating will be damaged, and long term interest rates will rise. And the very bottom line is - the 2002 budget must be slashed by NIS 3 billion, at least.
It is true Shalom accepted the growth estimates of his senior staff, including his director general Ohad Marani, but he should have known they were mistaken. The problem is that despite his late encounter with a reality check, the finance minister still does not intend to amend the proposed budget for now. He says that is impossible, and there is a chance that instead of cuts many ministers and MKs, the good and the great, will be calling for more spending - and he is right to worry.
But the end result is that the Knesset will pass a budget that is incorrect, and that is a nasty precedent. The only way out of it is that immediately after the budget is passed - the first week of January - the minister will present his rushed plan of cuts so we won't have to live a lie for too long.
Complications. On Tuesday last week, the Knesset held a Negev Day. All the Knesset committees held debates on the region, with mayors and public workers appearing before many panels. The MKs competed among themselves over who could promise more for Negev residents.
Silvan Shalom is identified with one of the Negev laws, the one that grants tax reductions for all Negev residents, rich and poor alike, despite the fact that the law originated with MK Yisrael Katz who is an expert at distributing public money and assets.
The trouble is, Shalom is pulled between two sides. The press (rightly) castigates him for supporting populist legislation that costs NIS 700 million a year, money the state does not have for investing in infrastructure and education.
On the other side, he is lambasted by Negev residents for reducing the tax breaks that were originally proposed in the Katz law. But if he is serious over slashing NIS 3 billion from the budget, then he must start with canceling the Negev Law. If not, he will be unable to do anything.
In any case it became clear on "Negev Day" that there is lots of information the public simply doesn't know about the area. Did you know that in the Negev, 8 percent of the population lives on 60 percent of the country's land? Did you know that 19 percent of Negev residents are new immigrants (from the CIS) who arrived in the past decade? Would you have been aware that Bedouin are 23 percent of the Negev population? Or that 57 percent of Bedouins are under 14? Or that a Bedouin woman has 10 children on average? And could you tell anyone there are 173,000 people in Be'er Sheva?
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