The Bottom Line / Whoosh! You missed it
Bachar and Ben-Chelouche have set a dangerous, most negative precedent, which allows politicians to change a report of a professional committee according to the pressure that they'll be under. This is a first for Israel.
The newspapers have been full of the Bachar report; analysts have pored over it, the banks have slammed it, the prime minister is studying it, Netanyahu supports it - but the truth is, there's no such thing. The report doesn't exist. The Bachar committee did not publish it. So all that has been written, all those arguments, have all been based on unsubstantiated sayings from the committee members. Eyal Ben-Chelouche even said that the report will not be published until the government approves it, "so as not to have the report members scorned." He added that the government may not approve it at all, in which case the report will never see the light of day.
Bachar and Ben-Chelouche have set a dangerous, most negative precedent, which allows politicians to change a report of a professional committee according to the pressure that they'll be under. This is a first for Israel. There has never yet been a professional committee report that did not publish its findings when its work was done. The practice so far has been for the report to be published, its findings analyzed, and then the panel members do everything they can, pushing and cajoling, so that its recommendations are brought in in one fell swoop. It hasn't always worked, but then the politicians did not have an easy time changing and canceling any part of the report because at least the public was aware of the benefits of the recommendations.
But the Bachar committee did not want to antagonize the politicians. They wanted to avoid demeaning themselves, but at the end of the day they have disgraced themselves.
One of the driving forces of growth that Netanyahu loves to talk about is putting the "fat man" on a tough diet, but when it comes to the 2005 government budget, the principles have flown out the window.
Just a few months ago, he was boasting over the "law limiting budget expenditure," and how the budget deficit for next year would not top 3 percent of gross domestic product. But yesterday in the Knesset Finance Committee, Netanyahu said the deficit will increase "to finance the cost of disengagement." You would have expected treasury officials to rise and denounce such an economic mistake, but budgets director Kobi Haber could only stutter. Begrudgingly he explained that the deficit will reach 3.4 percent of GDP. Accountant General Yaron Zelekha quickly stepped in beside his boss and said this was a one-time expenditure and therefore a legitimate overreach of the budget. Absolute rot. In every budget there are one-time expenditures, should they all fall outside of the limitations?
If Netanyahu really wants growth, he should slash the budget deficit to only 1 percent of GDP, because Israel's national debt is so vast it pushes our interest rates up high, raises the risk premium and slows growth. Whoever does not reduce this debt will be punished by the international capital markets, and will not be able to lower taxes in the long run.
And that's not all. Netanyahu recently said he does not control the legislative process, so that if the Knesset members want to "benefit the people," then the deficit could rise to even 3.6 percent. What is going on here? Maybe it's Netanyahu who wants to "benefit the people?" Is he just preparing the groundwork for increasing government expenditure? Is he getting ready for elections in 2005?
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