Lapid, Still the Populist

With the fate of Israel's economy in his hands, Lapid cannot be the great benefactor; he must be the evil little treasurer and guard the treasury with his life.

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If, up until now, you scratched your head, wondering who is the good guy and who is the bad guy in the story, the mystery was solved this week: Finance Minister Yair Lapid is the finest of good guys and his ministry’s budget division officials are the most villainous of bad guys.

This past week, Lapid supposedly saved Israel’s working women from the claws of the finance ministry’s officials. They wanted to cancel half a tax credit point ‏(worth NIS 109.50 monthly‏) given to working women and Lapid risked his life to nullify the decree. So that everyone would know what a great hero he is, Lapid lost no time in issuing an unprecedented press release that told of his daring deeds and which bore the modest title, “Lapid prevented a cut in the wages of working women.”

That kind of thing has never happened before in this country. No Israeli cabinet minister has ever divulged what transpired in closed-door meetings. How will the budget division’s officials be able to tell Lapid the raw professional truth in the future when the next day what they said will appear on the Finance Minister’s Facebook page, and their faces will be covered with egg?

This kind of action is akin to Prime Minister Benjamin Netanyahu issuing a press statement in which he announces that he shot down, at the risk of his own personal safety, a proposal that officials in the Prime Minister’s Office had presented on an agreement to partition Jerusalem. “Netanyahu prevented the partition of Jerusalem,” the press release would state and the whole nation would stand up and cheer.

Everybody knows that the officials of the budget division present the finance minister with dozens of proposals for budget cuts, many more than are necessary, so that a discussion can be held over the pros and cons of each one. In the end, the minister will decide which proposal to accept and which to reject. In the new state of affairs, after each time a decree is rejected, will these officials be tarred and feathered while Lapid emerges as the great benefactor?

Moreover, the budget division’s officials got a swift kick in a sensitive spot − and in public − when their minister announced on his Facebook page that he would protect the university students in this country and prohibit an increase in tuition fees. He publicly tore into one of the senior officials in his ministry for having talked with the students about this issue, even though the matter was in the official’s professional jurisdiction. Lapid went one step further and called in that official for a meeting where the naughty child was rebuked. Once more, Lapid emerged as the good guy while the senior official was the villain.

In fact, two years ago, the universities received a huge budget increase while tuition fees in universities and colleges were frozen for three years. Tuition fees in Israel are low − NIS 10,000 annually − when compared with tuition fees in the United States and Europe. Why should those who are studying to be accountants, lawyers, engineers or physicians not pay a slightly higher tuition fee? After all, they will enter a profession that will provide them with a high income for all of their working lives. Why should low- and middle-class taxpayers fund 85 percent of the universities’ budgets when most of the students are from the upper-middle-class? Would the sky fall if university students in Israel paid tuition fees of NIS 12,000 a year instead of NIS 10,000? After all, the increase would eliminate the need for other painful budget cuts. Besides, there are always loans and scholarships for needy students.

Thus, those who worry about the fate of the Israeli economy must now be concerned over Lapid’s initial decisions. His job right now is not to give but to take. He must make a huge NIS 20 billion budget slash and cancel all tax exemptions. He cannot be the great benefactor. He must be the evil little treasurer and guard the treasury with his life; otherwise, he will fail as finance minister.

People in Lapid’s immediate circle are saying there is no possibility of bringing the government’s budget deficit down to 3 percent this year as the law requires. They are talking about 4 percent, and even that is a dangerous deviation. They are even saying that the deficit will not dip later to 2.75 percent, where it should be, and that it will instead hover above the 3 percent line. If that happens, it will be a major macro-economic error. That kind of deficit will signal to everyone that the finance minister is afraid to do what has to be done even if it is painful. Then he will come under real pressure, he will lose the faith of the private sector and the road to an economic slowdown and increased unemployment will be very short indeed.

Lapid must slash the budget, not raise taxes. To do otherwise would be a mistake. He must not be afraid to cut the salaries of public employees, who received generous increases in recent years. He must not think about winning a popularity contest or about TV ratings. He is no longer hosting a Friday night news roundup show. Actually, low ratings will be proof that he has made the right decisions, not the populist ones. Have no fear, Mr. Lapid, your ratings will soar later, when the economy emerges from the deep pit it is in right now.

Finance Minister Yair LapidCredit: Michal Fattal

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