“Hello – there is a budget,” Prime Minister Benjamin Netanyahu informed Channel 12 News anchor Yonit Levi in a recent interview. More specifically, he said, there was a 413 billion shekels ($127.3 billion) budget for 2020. Netanyahu parroted his finance minister, Yisrael Katz, who gave the slightly more accurate figure of 411 billion shekel for the 2020 budget and 420 billion shekel for 2021.
They are “very similar to a regular budget,” Katz added.
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This new and sophisticated claim aims at reforming the commonly-held opinion that, for narrow political reasons, Netanyahu and Katz sabotaged the Israeli economy in the midst of the greatest crisis it ever faced by preventing a budget from ever being submitted to the Knesset.
That stands in sharp contrast to the days when Netanyahu was finance minister. Then, in the midst of the economic crisis of the second intifada, the government of Prime Minister Ariel Sharon won approval for four budgets over the years 2002 and 2003. The latter two were managed by Netanyahu himself, who understood that the crisis required the budget to be revised over the course of the year.
The failure of Netanyahu and Katz to pass a budget during the coronavirus crisis is nothing less than economic sabotage. Now, the two responsible for this travesty are busy trying to rewrite history – that there has been a budget all along (Netanyahu’s version) or at least the spending that has been authorized is very similar to a budget (Katz’s take). It’s a continuing budget, one that was copied and pasted from 2018 and enlarged and adjusted to address the pandemic crisis. It worked well.
Katz’s assertion that the continuing budgets of 2020 and 2021 are “very similar to a regular budget” is based on two claims. The first is that the enlarged and adjusted spending ensured that ministries got nearly all the allocations they needed. The second is that the budget was no more than the 2018 budget with some supplements added to it and that it distributed the money the way it should. Ordinarily, internal allocations in the state budget don’t change much year to year.
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Both claims contain a kernel of truth. The continuing budgets are huge – in 2021 alone it will reach 426 billion shekels (of which 6 billion shekels is currently unsourced). It is true that most years the changes in spending allocations don’t exceed a few percent of the total.
And, yes, after two years of these continuing budgets the spending caps that they normally impose have gradually disappeared. Accountant General Yali Rotenberg and the treasury committee, who are authorized to approve additional spending outside the fiscal framework set in 2018, have gradually loosened the purse strings. For instance, if the Transportation Ministry sought money for a new road, that normally wouldn’t pass muster if there was no allocation in the original 2018 budget. Today, the new road will be put under the general road-building budget and the ministry would get the money.
But in the end, Katz’s claims are unfounded. Most requests for new spending are not approved, meaning the government is stuck in 2021 with the same spending framework it had in 2018. The Tel Aviv Metro, the railway lines, upgrading information systems, new education and welfare programs have been delayed, not because there isn’t any money but because the continuing-budget framework doesn’t allow for them.
In a normal budget, at least 20 billion shekels is allocated for new programs, some of the money coming from cuts to older programs no longer needed. During an economic crisis, the government should be more proactive, increasing and adjusting spending in response, but the continuing-budget Netanyahu foisted on Israel does nothing of the sort. It’s stuck in 2018. Netanyahu’s and Katz’s claim that the continuing budget is just like any other is not only false but also illogical. It flies in the face of Netanyahu’s other claim that the country’s elected leaders should be making the decisions and that it’s the job of appointed officials, including the attorney general, to follow the politicians’ instructions.
The mechanism of the continuing budget is exactly the opposite – it’s the accountant general and the Finance Ministry brass that are making the decisions, not the politicians. Ministers have less power over the ministries because they can’t control spending; they simply have to follow the dictates of their predecessors in the last permanent government.
The principal of governance that Likud ministers constantly talk about, has become a dead letter. If they succeed in changing anything, it’s by going on their hands and knees to the accountant general and trying to make the case that their new spending is really just old spending. Hello, Netanyahu, aren’t the politicians the ones who are supposed to be determining spending priorities?
Indeed, the persistence of the continuing budget and the claim that it’s just like a regular one might lead one to conclude that there’s no need for ministers and their decisions at all. The government has kept on spending without their involvement; Israel is doing just fine with a budget that was designed for the year 2018, long before anyone had ever heard of COVID-19. If so, why not fire all the ministers, including their boss? They’re not doing anything and have no influence over one of the most important functions of government. They’re just another expense item from 2018.