Opposition leader Shelly Yacimovich presents her red line 37.
(photo credit: Marc Israel Sellem/The Jerusalem Post)
Only in Israel could the same budget proposal declare both that its spending
growth is higher than any budget in the past decade and that its spending cuts
are deeper than any in the country’s history.
The trick is, of course,
how you look at it.
According to the budget proposal released Tuesday,
the deficit for 2013 was on track to hit 5.5 percent of GDP due to previously
promised expenditures, so the new 4.65% deficit is lower than that, no
Then again, it’s higher than the 3% target that had been set by
the last government, a target Bank of Israel Gov. Stanley Fischer was hoping to
maintain. Though it may be tough for non-economists to care about abstract
things like the deficit or the debt, those numbers have very real impacts.
According to the budget proposal, in 2013, Israel expects to pay NIS 39b. in
interest payments on its debt.
That’s 80% of the amount it’s spending on
Part of what has been lost in the conversation about the budget
being slashed left and right is the fact that many of the cuts are, ultimately,
not really cuts. A large amount are reductions to promised expenditures. If I
promised to give you $10 next week, and then realized I could only afford to pay
you $5, is it a $5 cut or a $5 increase over what I’m currently giving you?
That’s how a budget can magically seem to grow and shrink at the same
Lapid, however, is trying to have it both ways.
On the one
hand, he isn’t sticking to a solid path of fiscal responsibility by allowing the
2013 budget to rise more than 50% above its original target. That means he can
avoid scaling back all sorts of cuts and tax increases that would cause a public
On the other hand, he’s laying out plans to return the deficit to
3% in 2014, thereby having to make all those cuts. As a result, he has upset
both the fiscal conservatives who wanted credibility for Israel’s debt
management policy and all the groups that will eventually feel the
He promised to refrain from increasing taxes on the middle class
during his campaign, going so far as to mock Prime Minister Binyamin Netanyahu
with a cartoon bomb summarizing Netanyahu’s tax increases in “terms he could
But to the delight of Shelly Yacimovich, who pulled out her
own cartoon tax bomb
to mock Lapid on Tuesday, he has been forced to break his
word, painfully cutting away at welfare benefits that will lighten many poor and
middle-class pockets. Now he promises his constituents that it will help in the
As Lapid is learning the hard way, campaign promises and
slogans have little bearing when it comes to making policies. Try though he
might, he can’t have it both ways.
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