Running Scared

Netanyahu is afraid to touch the defense budget, even though a great deal of fat has accumulated there - retirement at age 45, bloated procurement missions, excess "company" car privileges and grandiose projects.

Benjamin Netanyahu wishes he could forget last Thursday. He woke up to a horrific situation and suffered deadly criticism from all sides. He was accused of being the same old Bibi - evil, slashing social allocations, hurting widows, orphans, the unemployed, the ill, single mothers, even Holocaust survivors. He was accused of not even understanding why he was being targeted. . After all, he had labored for years to build a new image as a good man, socially sensitive and tolerant. But in a single morning the media caused that image to shatter in his face.

And so the same day he issued an unusual press release, in which he blamed senior treasury officials for hurting the disabled, the elderly and Holocaust survivors. This week, when pressure on him increased, Netanyahu also canceled plans to institute co-payments for hospital stays, to cut child allowances and to reduce maternity grants.

The zigzagging and the panic over the budget proposals are also characteristic of his behavior in other aspects of the economic program. Netanyahu promised not to increase the state budget by more than 1.7 percent over last year, but gave in to pressure from Defense Minister and Labor Party leader Ehud Barak. Now he is will agree to a much larger increase, which will result in a massive deficit.

Netanyahu's reasons for fearing the Labor Party are unclear. After all, there is no chance Barak will give up his seat and lead Labor out of the coalition government he crawled into. Netanyahu has a majority in the coalition, with his Likud and Yisrael Beiteinu backing him. So why surrender so quickly and risk a financial crisis?

The deal being put together with Histadrut labor federation chief Ofer Eini is also bad. Eini will give him little, but will get a lot. There will be no real cut in public sector wages, even though it is vital to the economy. The same is true for taxes. Netanyahu promised before the election that he would lower taxes, a move he described as "jet fuel" for the business sector, encouraging growth and jobs. He said foreign investors are drawn to places where taxes are low. But now he's zigzagging again, and there is talk of increasing social security and health insurance payments. This means increasing tax on work, just the opposite of what is needed.

Raising VAT is also a misplaced notion. It will hurt the middle and lower classes because it is a regressive tax. Most important, the less it receives in tax revenues the more the government will have to save and introduce efficiences - precisely what will allow the private sector to thrive. Therefore, cuts should be made fearlessly, as is being done now at every private company.

Netanyahu is also afraid to touch the defense budget, even though a great deal of fat has accumulated there - retirement at age 45, bloated procurement missions, excess "company" car privileges and grandiose projects. Without a deep cut in defense it will be impossible to finalize any economic plan.

Once Netanyahu was braver and more determined. He would not have lost his cool the way he has now. In early 2003 he proposed much more radical steps: cuts in wage subsidies and benefits for children, single mothers and the elderly. He carried out a NIS 3.5 billion budget cut and lowered taxes substantially. He bypassed the "treasury boys" and encouraged his people to be more daring, to cut more, to carry out more reforms. The pressure on him, including that by single mother Vicky Knafo, did not weaken him or alter his program.

But today Netanyahu is weak, cowardly and much decisive. The criticism over the past six years appears to have had an effect, even though it was misplaced. He has lost the courage to carry out what he believes in and what worked so well in the past.

Because now Netanyahu wants it all: to save the economy and also to be "good" and "socially sensitive." But the two don't go together. You have to be "bad" to succeed. You have to make cuts to rescue the economy. You also have to know that sooner or later the people will open their eyes and realize how he benefited them. This is the only way to save the nosediving airplane that is the Israeli economy.