Stopping the ox at its threshing
After two years of partying, expansion and augmentation, this week the time came to pay the bill.
After two years of partying, expansion and augmentation, this week the time came to pay the bill. Finance Minister Roni Bar-On announced to the cabinet Tuesday that a real budget cut will have to be made. Although he did not announce the size of the cut, it is a matter of many billions, so the outcry will reach the high heavens. Because who likes cuts? Prime Minister Ehud Olmert, for example, hates them.
But there is no choice. Over the past two years Olmert has created an atmosphere whose message is, "I've got it to spend," and ministers understood which way the wind was blowing. They vied with each other to see who would go wilder, who would propose more projects and initiatives to increase the government outlay. The ploy is simple: Decide each week on a new project, but say that it will not begin immediately, due to funding limitations, but rather next year, which meanwhile has no such limitations.
The problem is that "next year" is already here. It is 2008 and also 2009, ahead of which the premier has chalked up unprecedented billions of shekels in pledges, all without any source of funding.
During these two years, MKs also attempted to outdo each other to see who would propose more generous bills to benefit all kinds of population groups. Passing laws is easy, but finding funding is much harder.
In addition, the Finance Ministry has acquired an adversary in recent years. It is Ra'anan Dinur, the director general of the Prime Minister's Office, who does not stop making various and sundry proposals to promote grandiose projects that increase spending even though they lack any source of funding.
But the main individual responsible for this destructive process is the prime minister. Since he was elected two years ago, the government has changed direction. Olmert has raised the spending limit (to 1.7 percent of the budget) and now he wants to raise it to 2.5 percent; but that will not prevent the cut either.
Prime Minister Olmert began his term in office with plans to fight poverty. However he went on to a multi-annual plan to hugely augment funding to the Israel Defense Forces following the Second Lebanon War, although the Winograd Committee determined that the failure in the war did not stem from funding problems.
Then came the education reform, and after that, salary hikes for university faculty, followed by large-scale investments in roads, trains, old-age pensions, assistance to youth at risk, updating the health-care basket, augmenting the police force by 1,000 personnel, reinforcing Sderot, the law granting benefits to reserve soldiers, additional money for the Gush Katif evacuees, the economic recovery plan for the Israel Broadcasting Authority, and on and on.
All of these goals are important and just, but the budget has its limits. If all these projects were to be carried out as planned, the 2009 budget would swell by approximately NIS 10 billion, whereas the law allows it to increase by only NIS 4 billion. The result will be a serious budgetary crisis, a decline in Israel's credit rating, a rise in the interest rate, a decline in growth and more unemployment.
That is Olmert's problem: He is incapable of setting priorities, he does not stand up under pressure, he does not like to say no. Olmert prefers to be good to everyone and give to everyone, until reality slaps him in the face.
But Bar-On and budget supervisor Rami Belnikov have not proven their determination. They have also not done their jobs. Two weeks before Passover, at a meeting with Olmert, it was agreed that by seder night, the amount of the 2008 cuts would be resolved.
So far no decision has been made. Olmert postponed the meeting on this matter for all kinds of reasons, and Bar-On and Belnikov gave in, to their shame. The more time that passes, the harder it will be to cut, because the end of the year is coming ever closer.
It will also be difficult to slash ministries' budgets if it is decided not to cut those of defense and education. These, after all, are the largest budgets and have recently been augmented further (the defense budget following the conclusions of Brodet Committee, and education budget following the reform). Therefore, without cutting (and there is where to cut) and streamlining in defense and education, there will be harsher cuts in health, welfare, infrastructure, the police, industry, tourism and environmental protection.
All this could have been avoided if the cabinet had acted responsibly over the past two years. If Olmert had been a thriftier prime minister he would not now be forced to swallow the promises he made in so many areas. It is also clear that backtracking on or postponing the pledges will place him under harsh political attack, which already began yesterday in the Knesset.
It is indeed difficult to muzzle an ox as it threshes, but it is even more difficult to get the ox to bring back up what it has already eaten.
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