Finance Minister Yuval Steinitz has only himself to blame. For two years he's been telling the people how we're in such wonderful condition, how high growth is, how low unemployment is, how much better off we are than ailing Europe. Then the people finally began asking: If things are so great, how come we can't make ends meet?
Over those two years we tried to explain to Steinitz that he shouldn't be complimenting himself. We tried to tell him that he's creating huge expectations that will eventually blow up in his face. We wrote to him that his job is to be a prophet of doom, to talk about the difficulties, the dangers and the crises awaiting us just around the corner. And such crises there are.
We explained that he should play the role of the "bad treasurer," always demanding cuts and greater efficiency and always carrying out important reforms. And then, those likely to get hurt will get the public to fight against such steps. We even proved to him that if he acts this way, he may be criticized, but when his term is over everyone will see that he did the right thing because the economy will be in good condition and he'll reap the benefits.
But Steinitz is unable to delay gratification. He can't hold anything back. He just had to go and tell everyone what a smarty-pants he is and how well he understands economics, better than anyone else. Even better than Stanley Fischer. Until it came time to pay the bill.
Steinitz's status is now at its lowest, as is the case with the Finance Ministry. The funniest thing is the two-year budget, which Steinitz touted tirelessly, obsessively, everywhere and at any time. He said the world likes the two-year budget and that various countries plan to adopt a similar system. But we still haven't heard of any company or state buying this illusion. In Israel too, the two-year budget has become a joke. We don't even have a closed budget for one year. Or for one month. Now they're about to totally revolutionize it.
Two weeks ago, pressured by the first large demonstration, all the rules of planning and budgeting were broken and the Finance Minister was dragged by the ears to agree to a strange housing plan, whose cost no one knows, put together solely for the sake of a press conference. The budgets department opposed most of the planks, especially the "price per dweller," but no one noticed. The department's head, Udi Nissan, is so weak that Eyal Gabbai, the director-general of the Prime Minister's Office, presented the strange new program for him. Steinitz's opposition didn't make any impression on anyone either.
At the beginning of the week the panic in the Prime Minister's Office reached its peak and gasoline prices were frozen. Now Netanyahu has announced he will create a "ministerial committee" to meet with the protesters and discuss solutions for easing the burden - a role traditionally held by the treasury. It's no surprise then that the treasury's director-general, Haim Shani, has announced his resignation, and Steinitz feels like he's received another slap in the face in public.
The danger posed by a weak treasury is that the distribution of goodies to pacify the public will gain momentum, which might breach the budget and trigger a macroeconomic crisis. Because when the smell of fear is in the air, demands from all sides just keep coming.
It's hard to keep track of all these demands. Besides the housing program, which will cost who knows how many billions, a 50 percent discount on public transportation has been granted to students, gasoline prices have been frozen, the heating grant to the elderly has been doubled, a 50 percent discount has been granted to baby strollers on public transportation, police officers' salaries have been raised, and another NIS 300 million has been transferred to settlers evacuated from the Gaza Strip, in addition to the NIS 7.4 billion they have already extorted from the government.
In similar situations, the budgets department used to stand its ground and block populist proposals. But under Nissan the department has weakened substantially; its presence is barely felt. We once had a Finance Minister who would bang his fist on the table and even threaten to resign when benefits were being doled out despite budget considerations. Steinitz is an honest and intelligent man capable of learning. Will he be able to draw the right conclusions?
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