Netanyahu and Steinitz are paying the price today for the Western world's most inflated and wasteful government.
Prime Minister Benjamin Netanyahu has postponed until today the press conference where he will unveil economic steps to ease the burden of price rises, especially of fuel. It's good he postponed the briefing. That gives him more time to study the subject, and he won't unduly stress Finance Minister Yuval Steinitz, who is in the hospital suffering from exhaustion.
Netanyahu met yesterday with Histadrut labor federation chairman Ofer Eini, Union of Local Authorities chief Shlomo Buhbut and Manufacturers Association head Shraga Brosh. They left disappointed. It turns out that Netanyahu listened to them but didn't meet all their requests or commit to immediately reducing the price of fuel and water. Netanyahu also didn't tell them he would immediately raise the minimum wage.
That's good, because an orderly government can't give in to pressure, some of it populist and misguided, without thoroughly examining what it means for the Israeli economy's strength and stability. Bank of Israel Governor Stanley Fischer said this week that the budget framework must be kept in place to maintain economic stability at this time of crises around the world.
The economic truth is that Netanyahu and Steinitz are paying the price today for last year's generous policies. Netanyahu formed the Western world's most inflated and wasteful government, and a month ago he passed a budget that includes a sharp spending increase.
He and Steinitz surrendered to almost every demand. They gave generous budget increases to every ministry, dished out billions to yeshivas and their students, raised grants for the business sector, hired more people and irresponsibly raised public-sector salaries. They recently added NIS 700 million to the defense budget, and a month ago increased the budget for local councils by NIS 800 million.
All this has a price, and the price is tax increases. That's why they levied an exaggerated fuel tax. That's why they imposed value added tax on water. That's why they didn't reduce value added tax as promised - because in the economy there is no free lunch. We hope that this time Netanyahu will withstand the pressure and present small and measured steps. After all, it was he who declared that "my decision will be responsible and not populist."
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