The Treasury / Watch the Kitty

It was downright insulting. The finance minister announces he is temporarily stepping down, and the stock market goes up. The central bank governor isn't worried either, and lowers interest rates. As if nothing ever happened. As if there was no connection between the minister - the economy's highest officer - and the economic situation.

The market didn't crash and the public wasn't worried because the finance ministry has been paralyzed for a long time, and business has become accustomed to working without it. And it helped that Abraham Hirchson is not a dominant finance minister.

After a year in office he has not left his mark. He has created no revolutionary agenda or promoted any important reforms: not in the civil service, not in the education system, not in the electric company, not in the airports authority or in the Israel Lands Administration. And because no reforms will get stuck in the middle - because there are no reforms - no one was worried by the suspension.

The treasury now takes the word "reform" in vain. It presents a few plans that contain nothing but distributing funds to the public at large, which is always nice. Everyone knows it is popular to decide on a negative income tax, pensions for the masses and to enforce labor law. But those are easy decisions. They're are not reforms that lead to rapid economic growth.

Hirchson is an old school politician - one that doesn't run to the press and doesn't employ many advisers and aides. Out of total loyalty to Ehud Olmert, he even allowed the prime minister to steal the show a number of times, like the "social economic agenda" last week that the prime minister presented himself.

But there was one time Hirchson did slam his fist on the table: in August, when a panicked Olmert wanted to revise the 2007 state budget a day before its presentation to the cabinet. Budget director Kobi Haber threatened to resign. Hirchson came to a closed-door meeting with the prime minister and said that if he had to add a few hundred million to the budget for "social goals" he would leave the keys on the table and go home. Olmert folded and the budget was saved. And with it, the economy.

But now, who will rein in Olmert when he himself controls the kitty? We have a prime minister in a tough corner, with state comptroller investigations against him, police investigations against him, as well as the soon-to-be published findings of the Winograd Committee. Olmert is like a wounded animal who will do anything to survive. And that's dangerous for the economy.

Olmert has already proven that meticulously guarding the public kitty doesn't interest him. He is willing to spend what it takes to achieve quiet - who cares about a deficit or all those economists? Recently Olmert caved in to Gush Katif evacuees and handed over a few hundred million shekels. He gave in to university professors too, and will soon buckle to the students as well.

The situation is particularly dangerous because the state faces a number of critical salary agreements in the entire civil service. It takes an iron fist not to break the budget framework, and Olmert doesn't have that fist.

His policy will be the opposite, a series of populist decisions under the headline "good for the people, all of which will mean give, distribute, subsidize, support - getting sympathy and good will from the public. Because everything is kosher when trying to stay in power. Difficult reforms? Structural changes? Heaven forbid. Streamline the defense budget? Education reform? Who are we kidding?

Many complain that Olmert will be a part-time finance minister. They say managing the economy requires a full-time finance minister. But if they're talking about an interim period, then it's fortunate that Olmert won't have much time. Because the less time he has, the less damage he will cause.