The Israeli budget
The Israeli Cabinet approved the Budget for 2009-10 on Thursday after an all-night session. It now requires Knesset approval. This Budget was more controversial than most, because PM Netanyahu is a well-known exponent of the free market and in the current economic downturn, in order to stimulate the economy and not raise taxes, he tried to cut Government spending. While this seems at first sight like an eminently reasonable thing to do, he was attacked from several sides by proponents of special interests, and was forced to revoke many of his proposed cuts.
Instead of a 6% across the board cut, he removed the cuts in the areas of Education, Health and Defence, under threat that those Ministers would resign. They also had support from other groups, such as the teachers in the case of the education budget, and the doctors in the health area. The idea that some of the reversals in the social area would come from the Defence cuts was scotched when the Defence establishment supported Defense Minister Barak against them. Also, the cuts in welfare programs such as for children and the elderly were reversed and the planned cuts in salaries for public sector workers will be dropped under threat of the head of the Histadrut Trade Union to take the Labor Party out of Netanyahu's coalition.
In order to cover the losses, Netanyahu and his Finance Minster Yuval Steinitz, added 1% to the VAT and a tax on the sale of fruit and vegetables for the first time in Israel. One might think that this budget, arrived at through political chicanery and blackmail might be considered a terrible one by the experts. But, that is not the case, after all is said and done the budget is reasonably well-balanced between cuts and additions, between societal interests and special interests. The Jerusalem Post editorial about the Budget called it "wrong process, right result."
One outcome of the budget process was the resignation of the Budget Director Ram Belinkov. He resigned in protest because of the undue influence of outside forces on the budget process, namely lack of Government control of the outcome. But, many criticized him for this, because unfortunately this is the way politics and budgets work in Israel, it is all a process of negotiation. And very few think this Budget will last, it will have to be modifed as time goes on in light of exigent circumstances. Few believe that the compromises worked out by Netanyahu and Steinitz for the passage of this Budget will remain in effect for the duration of the life of this Government.
Instead of a 6% across the board cut, he removed the cuts in the areas of Education, Health and Defence, under threat that those Ministers would resign. They also had support from other groups, such as the teachers in the case of the education budget, and the doctors in the health area. The idea that some of the reversals in the social area would come from the Defence cuts was scotched when the Defence establishment supported Defense Minister Barak against them. Also, the cuts in welfare programs such as for children and the elderly were reversed and the planned cuts in salaries for public sector workers will be dropped under threat of the head of the Histadrut Trade Union to take the Labor Party out of Netanyahu's coalition.
In order to cover the losses, Netanyahu and his Finance Minster Yuval Steinitz, added 1% to the VAT and a tax on the sale of fruit and vegetables for the first time in Israel. One might think that this budget, arrived at through political chicanery and blackmail might be considered a terrible one by the experts. But, that is not the case, after all is said and done the budget is reasonably well-balanced between cuts and additions, between societal interests and special interests. The Jerusalem Post editorial about the Budget called it "wrong process, right result."
One outcome of the budget process was the resignation of the Budget Director Ram Belinkov. He resigned in protest because of the undue influence of outside forces on the budget process, namely lack of Government control of the outcome. But, many criticized him for this, because unfortunately this is the way politics and budgets work in Israel, it is all a process of negotiation. And very few think this Budget will last, it will have to be modifed as time goes on in light of exigent circumstances. Few believe that the compromises worked out by Netanyahu and Steinitz for the passage of this Budget will remain in effect for the duration of the life of this Government.
posted by Jack Cohen at 11:35 AM
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