A cure for overspending? It's a start

Light hand on the reins and structural impediments have brought Israel to a huge budget overrun, that the Treasury is now attempting to redress.

How did the State of Israel rack up such a huge budget overrun, some NIS 14 billion in the planned 2013 budget? There are two answers - one technical and one fundamental.

The important, fundamental answer is linked to Prime Minister Benjamin Netanyahu and his economic policies over the past four years. In an attempt to change his image from when he was finance minister almost a decade ago, he loosened the reins. And after the cost-of-living protests of summer 2012, his light hand on the reins turned downright lax. He has gone out of his way to avoid confrontation with almost everyone. A weak finance minister only made things worse.

The technical answer has to do with the two-year budget, which means Israel lost its ability to rein in spending when approving the second year's budget. That prime ministers overspent and over-promised in the past is nothing new. What is new is that such promises no longer have to be voted on and approved every year; the reckoning was put off for another year. The two-year budget put an end to a natural brake that previously occurred annually.

The new powers the treasury is seeking could be a first step toward solving both these problems.