Netanyahu's Unloaded Gun

The prime minister's capitulation and flip-flopping have brought him to the point where no one is scared of his threats.

When you threaten someone with a gun without any bullets, you scare two people: the other person and yourself. Who knows better than you that the gun can't shoot, and what will you do when the other guy finds out?

This is currently happening to Prime Minister Benjamin Netanyahu. He was in fine form in a cabinet meeting when he threatened Ehud Barak, Avigdor Lieberman and Eli Yishai that if their parties didn't vote for the budget in its first reading in the Knesset, he would withdraw it and the government would fall. He then threatened Likud rebels that if they didn't vote for the budget the coalition would crumble and they, too, would lose their seats.

But the party heads and Likud rebels haven't been getting very worked up. They know Netanyahu is holding an unloaded gun. They know he has the most to lose if the government falls. They know he can be pressured, and in the end will give in to their demands. Therefore, they will agree to vote for value added tax on fruits and vegetables in the first Knesset reading, but will fight it fully in the second and third readings.

How do they know the gun has no bullets? The answer: Netanyahu has shown no backbone. He surrendered unconditionally to anyone who pressured him even the slightest and broke all the rules for managing the budget. So why should he now get brave all of a sudden?

It started with his irresponsible coalition agreements with Shas and Labor, which cost NIS 3 billion. He agreed to raise child allowances by NIS 1.4 billion, contrary to his fundamental beliefs. He agreed to raise old-age stipends by NIS 800 million, even though he knew the till was empty. He distributed NIS 100 million to nonprofit social-welfare organizations, added another NIS 500 for unemployment benefits and even granted an exemption from management fees for members of certain pension funds.

Netanyahu told everyone he was born again: the social-welfare Netanyahu. He's the man who canceled the harsh decrees demanded by the evil treasury, the one who gave everyone the secret code to the treasury's safe - and all are invited to come and take because he has gone crazy.

Netanyahu gave up on an NIS 3 billion cut to the defense budget. He agreed to a long list of labor laws that will turn the world upside down: He sent his economic adviser Uri Yogev to negotiate with Histadrut labor federation chairman Ofer Eini - and the result was an embarrassing surrender.

Instead of wage freezes worth NIS 5 billion, which Eini had promised Finance Minister Yuval Steinitz, Yogev and Netanyahu received only NIS 2 billion in the form of a ridiculous concession on vacation pay and a contribution by employers. And since spending grew and grew, they found a creative solution: raising the legal limit on increasing budget spending from 1.7 percent to 3 percent.

This is the same Netanyahu who cut the limit on increasing the budget to only 1 percent when he was finance minister in 2003, while lowering taxes. But then he had prime minister Ariel Sharon's solid support. Today he only has himself, as firm as the shifting sands. He is raising taxes even though on the eve of the elections he promised to lower them, because "tax cuts are jet fuel for economic growth."

He announced increased National Insurance payroll deductions, another name for increasing taxes on work, the exact opposite of what is needed. He also intends to increase VAT, a regressive tax, and levy VAT on tourism services and fruits and vegetables. This is because the law of conservation of mass reigns in economics, too: If you raise spending without limits, one day you will have to raise taxes, because you can't create something out of nothing.

Knesset members know who they are dealing with - someone who has given up on his principles. So why not also give in on levying VAT on tourism and fruits and vegetables? What difference would it make? What's another NIS 2.3 billion missing from the kitty?

Netanyahu's capitulation and flip-flopping have brought him to the point where no one is scared of his threats, so now it seems obvious that VAT will not be levied on tourism services and fruits and vegetables. MKs and ministers know that even when Netanyahu faces them with a big gun in his hands, he has no bullets.