It's very difficult to slash money in the government ministries. It's even harder when there is a prime minister who likes to dole out money.
Every Sunday the cabinet meets and the ministers raise their hands in favor of another expansion of the budget. The money flows, and the finance minister can't stop the flood. The 2008 budget reserves are already depleted and, with incredible ease, the government is now debiting the 2009 budget by billions of shekels without setting any order of priorities. Every expenditure is for the best.
Social Affairs Minister Isaac Herzog wants more money for the elderly; Transportation Minister Shaul Mofaz is increasing the state's share in El Al's security outlays; Prime Minister Ehud Olmert is increasing the budget for children at risk by NIS 250 million; Finance Minister Roni Bar-On is extending the duration of the benefits for Sderot and the communities around the Gaza Strip; Industry Minister Eli Yishai is pressing for a higher children's allowance; and Ra'anan Dinur, the director general of the Prime Minister's Office, has a long list of expenditures, all for good causes. But who is going to finance all this?
The situation in the Knesset is even more hallucinatory. There is no coalition and no opposition. Everyone is opposition. Everyone is against the government. Every MK is trying to submit as many motions as possible that will "be of benefit to the nation."
And what will happen to the state budget and who will pay the bill? It doesn't matter. The main thing is to gain the love of the public, so people will know who to vote for next time. The competition to be the champion of populism is at its height.
Under these conditions, it is not surprising for odd couples to form. MK Shelly Yachimovich (coalition) is forging an alliance with MK Gilad Erdan (opposition). And the two are submitting a bill to recognize, for tax purposes, the interest paid on mortgages. It makes no difference that their economic worldviews are diametrically opposed, as long as it sounds good in the media and earns them a few more public-opinion points. After all, the public wants to pay fewer taxes, and if a hole is created in the budget, hey, that's not their problem.
MK Gideon Sa'ar has joined the celebrations. He wants to grant tax points to working women. That sounds terrific, too. It will also bring about lower tax payments. His fellow opposition member, Yisrael Katz, succeeded on Wednesday in pushing through, in a preliminary reading, a bill to grant tax breaks for residents of Be'er Sheva and the Negev. Why Be'er Sheva? It is not Sderot and it is not Kiryat Shmona. But MK Shai Hermesh (coalition) abstained and so the bill passed.
MK David Tal (coalition) is sponsoring a bill that would increase guaranteed income payments for single-parent families, even though the legislation will hurt the process of people going to work and the reduction of poverty. It's also contrary to government policy. But, as we said, everyone is opposition.
A Bank of Israel study that examined the government's commitments in the coming years in security, education, social welfare and infrastructure, concluded that in order to fall within the permitted limits of expenditure (an increase of 1.7 percent in expenditures), the government will have to "cut significantly each of the budgets in the years ahead."
A senior official in the budgets branch of the treasury said in response to the study: "They ain't seen nothin' yet - the real situation is a lot more serious."
To pass the 2008 budget in the Knesset, the finance minister had to give up a lot of "edicts." He gave up the idea of collecting National Insurance payments from housewives, he increased National Insurance allowances and expanded the basket of subsidized medicines by NIS 400 million a year.
The result: a hole in the budget even before it was launched.
In addition, commitments were made for more expenditures in the education budget in the wake of the wage agreements with the high-school teachers and university lecturers, along with building new classrooms. Additional outlays can be expected during the year, such as wage increments for physicians and the reform in the Israel Broadcasting Authority. So there is no escaping a hefty cut in the budget.
Indeed, the budgets branch is now preparing the cut, which will total between NIS 1 billion and NIS 1.5 billion. It won't be easy. It's very difficult to slash amounts of that order in the government ministries. It's even harder when there is a prime minister who likes to dole out money.
But that's Olmert for you. He loves to be good to everyone. He behaved the same way as industry minister and as communications minister. Always giving. Always buying support and sympathy with the help of the state budget.
When Ariel Sharon was prime minister and Benjamin Netanyahu finance minister, all these people tried to keep a low profile. The ministers tried to sit quietly so they wouldn't be noticed, and maybe evade the budget ax.
Now it's the opposite: The prime minister is giving handouts and the finance minister has no political power. Everyone is barking out at the top of their voice in the midst of the liquidation sale of the Israeli economy.
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