Netanyahu and Lapid: Making the Fat Man Even Fatter

Instead of giving in to the generals, Lapid should have insisted they leave the central bases, where thousands of housing units could be built.

Nehemia Shtrasler
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Finance Minister Yair Lapid and Prime Minister Benjamin Netanyahu really want the same thing. They want to lower housing prices and reduce the tax burden.

They know these are the two issues that infuriate their voters the most. So why are they moving in diametrically opposite directions?

Netanyahu is the person who taught us the parable of the fat man (the public sector) riding on the back of the thin man (the private sector), who is almost collapsing. So then why is he making the fat man (think, the Defense Ministry) even fatter, and the thin man (think, the taxpayer) even weaker?

The most basic rule in economic management states that if you want to lower taxes you must first of all cut spending, otherwise you will run up a deficit. It's a rule Netanyahu implemented himself when he served as finance minister in Ariel Sharon's government in 2003. He cut government spending and lowered income taxes, value added tax and corporate taxes. The result was speedy economic growth, a drop in unemployment and a low budget deficit.

But now he is acting in exactly the opposite way. He is increasing defense spending and, in doing so, he is not leaving himself any room to lower the tax burden that has already reached frightening levels. The most recent addition to the defense budget, NIS 2.75 billion, is Netanyahu scoring a goal against himself, and really against all of us.

And Lapid is adding another sin on top of Netanyahu's own transgression when he says that, after the defense budget took its pound of flesh, he wants to designate the remaining surpluses - NIS 1.75 billion - to such important civic goals as "afternoon day care, health, education and lowering the cost of living." The minute he said there were surpluses he wanted to distribute, there was a long line of ministers, Knesset members and pressure groups demanding the money for excellent purposes.

And now, the morning after Lapid's declaration, Social Affairs Minister Meir Cohen said the money should go to his ministry. In this way, the pressure on Lapid will only increase, until he finds himself giving out not only NIS 1.75 billion, but also what he doesn't have. Hasn't he learned anything from what happened to his predecessor Yuval Steinitz? Maybe it all stems from the criticism he received and his desire to wring out a little love from Facebook commentators.

In any case, a finance minister who understood political economics would say exactly the opposite. He would say there is no surplus, but there are risks and problems and great uncertainty before the end of the year. Who knows what will happen in the wage arena, the crisis at Hadassah Hospital and to the foreign currency exchange rates and exports? After all, the planned budget deficit for this year stands at 4.6 percent, and a responsible finance minister must reduce this excessive figure so as to bring stability, economic growth and employment. So why give out billions more now?

No less of a mistake is Lapid's strange support for the establishment of a "public committee to examine the defense budget." He is certain the committee will examine the excessive pensions, the cars, the reduced health insurance rates, the Rehabilitation Division, the inflated military headquarters and the grandiose projects - and propose cuts in all of them.

He doesn't understand that the exact opposite will happen. The committee will hear military officers speak about how they are deprived and about the shortages - and turn to the second coming of the Brodet Committee - in other words, it will add billions to the defense budget, instead of cutting back.

Lapid also missed out on the opportunity to advance his central agenda in the area of housing. He should have demanded that the billions be transferred to the military only after it vacates the bases in the center of the country, such as Tel Hashomer, Tzrifin, the Adjutant Corps base in Ramat Gan and the Sirkin base in Petah Tikva. It would have made the IDF finally leave these expensive properties, upon which thousands of housing units could quickly be built - a step that would lower housing prices and bring Lapid a little bit of political benefit. But none of this was done. The military received the money without committing to give anything in return.

Therefore, taxes will not fall and the price of housing will continue to climb, and that is the sure recipe for encouraging emigration to Berlin.

Netanyahu and Lapid. Credit: Archive