Budgetary Alchemy

This past Sunday, cabinet ministers set off on their daily race: Twenty ministers decided to create a safety net for the public's pension savings. None of them asked who will pay the bill. They only want to look good to the voters.

As soon as an Israeli politician wakes up in the morning, he starts running to hand out goodies. One day, he hands out funding from the state budget; the next day, he promises to lower taxes; and the day after that, he fights over who will offer the most generous "safety net" for the public's pension savings - all in order to win the voters' love.

This past Sunday, cabinet ministers set off on their daily race: Twenty ministers decided to create a safety net for the public's pension savings. None of them asked who will pay the bill. That does not interest them. They only want to look good to the voters. For otherwise, they will not survive in the political jungle, a mission that consists entirely of pulling the wool over people's eyes and making empty promises at the expense of future generations.

There was one righteous man: Finance Minister Roni Bar-On voted against implementing the plan he himself submitted to the cabinet against his will. He argued that the plan's time has not yet come. Over the last 10 years, the public has earned hefty profits from its pension and provident funds, even after this year's losses, he said. Moreover, he added, the public has not become hysterical: Withdrawals from the funds total only some NIS 150 million a day, which is not that much higher than the standard withdrawals we saw in August: NIS 100 million a day.

Bar-On argued that the safety net is regressive and socially unjust. It is also an enormous waste of NIS 17 billion (!), which will therefore be unavailable for education and health, he said. But none of it helped. The ministers were off and running, and the public wants "gifts now."

In the past, in normal years, such a decision could never have passed the cabinet over the finance minister's objections. Never has a prime minister dealt his finance minister such a public humiliation. At the cabinet meeting, Ehud Olmert treated Bar-On contemptuously, insulting him and lording it over him. The tension between the two was palpable.

Olmert simply pays no heed to anyone. He has abandoned all restraint. He wants to leave scorched earth behind him. In addition to the safety net, Olmert suddenly threw his support behind a new plan submitted by the National Infrastructure Ministry - to turn the Negev into a national priority zone in the field of renewable energy. This plan has no funding in the existing budget, and it would cost billions of shekels. Bar-On objected, but Olmert brushed him off and declared: "I make the decisions, not you."

In the diplomatic realm, Olmert wants to be remembered as the person who offered the peace plan with the greatest concessions, not as the man who dragged the country into the Second Lebanon War. In the socioeconomic realm, he wants to be remembered by the public as the very best prime minister, because he generously handed out money he did not have. He does not want to be remembered as the premier who was forced to leave office due to suspicions of criminal corruption.

If the prime and finance ministers were cooperating as they should, they would go to Histadrut chairman Ofer Eini, Labor Party chair Ehud Barak and Likud head Benjamin Netanyahu and say: You are demanding a safety net to protect the public's pension savings, but it will cost billions. Therefore, we must make massive cuts - because there is no budgetary alchemy. If you increase spending on one item, you have to decrease it on another.

This is why you must agree to streamline the public sector via layoffs, a wage freeze and a long list of reforms in the electricity sector, the ports and the Israel Lands Administration, so the economy will receive a few shots in the arm to encourage growth and employment. You must also agree to pass the 2009 budget in the Knesset, because otherwise, the government will not be able to take action in the first third of 2009, and that will deepen the recession and further harm pension savings.

Such a step is essential if we want to save the economy from a deep depression. But it is also impossible in the existing political climate, in which every politician has a stranglehold on his neighbor and is running from morning til night in a mad race to disburse more promises.