'Budgetless' in Jerusalem

If Kadima were to join a Netanyahu-led coalition, it would save precious time and plenty of money.

By
February 14, 2009 21:11
3 minute read.
'Budgetless' in Jerusalem

Knesset 224.88. (photo credit: Ariel Jerozolimski)

 
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While last week's elections continue to spawn spin and speculation, many Israelis forget that we've entered 2009 without a budget. The longer coalition creation agonies persist, the longer it will take until an updated budget is put in place. The law allows for a considerable delay in this particular case - beyond anything ordinarily permissible. But the longer the economy is forced to conform to an irrelevant, makeshift arrangement in lieu of an apportioning of resources that is appropriate to our current situation, the greater the very tangible resultant damage will be. The Basic Law, our de-facto constitution, stipulates that the state budget must be annually approved by December 31. The outgoing coalition didn't manage this. The legal remedy for such an impasse is to divide the previous approved budget (in our case, the 2008 budget, devised in 2007) into 12 portions and spend each one during each month in which no new budget exists. The immediate upshot is that no new spending or policy switches are possible, not even the capital injection so fundamental to the Treasury's much-touted stimulus package. In effect, our economy becomes reduced to auto-pilot basics, while the local and global economies are in utter upheaval. A budget concocted in times of economic glut is patently unsuitable for combating deepening recession. But there is currently no way to avoid the constrictions of 2008's now meaningless budget. EVEN IF coalition-formation formalities proceed without extraordinary twists in the plot - a very optimistic projection - a new budget is unlikely to be approved before mid-to-late May (assuming the president appoints someone to form a coalition by February 22, which would entitle the premier-designate to 28 days, with an additional 14-day extension). A 2001 Basic Law amendment stipulates that in the event elections take place before a budget is adopted, the new government will have 45 days, from the date it is sworn in, to submit its own proposed budget for Knesset approval. This, of course, is the rosy scenario. Things could get further entangled, and this at a time when unemployment is spiraling, enterprises are teetering, growth is stymied and financial markets are gripped by a crisis of confidence. Then, of course, there are the fiscally irresponsible expenditures that haggling with extortionist small Knesset factions would impose. Shas demands that child allowances be hiked by NIS1.5b., while the UTJ wants NIS 400m. for its educational institutions. That's just for starters. Many demands, like child allowances, come in the guise of generosity to society's have-nots. Pro forma it's laudable; except that charity at the expense of anyway hard-pressed taxpayers is counterproductive. These sorts of handouts won't alleviate poverty. Growth and derivative job creation are indispensable. Patronage - no antidote to recession - diverts funds from where they're really needed. But this will be hard to argue in the face of the populism that is expected: It's no simple feat to explain why children are being denied larger subsidies when the government must de facto underwrite the bonds of big concerns. The fact that debt defaults could throw the economy into unprecedented chaos and impact every household is a tough sell in the market of public opinion. Additionally, the longer the list of small factions the new coalition is forced to accommodate, the greater their appetite for portfolios. The result: a larger cabinet rather than the trimmed-down one prescribed by the public interest. The budgetary floodgates are likely to be flung open, with the flow going in the wrong direction. The only way to preempt all this is to deprive small factions of their bargaining chips. The Likud is already being squeezed hard by would-be partners. Kadima, however, can extricate us all by giving up on the idea that it is capable of forming an alternative coalition or spoiling things for Binyamin Netanyahu. These maneuvers only up the ante of other factions. If Kadima were to join a Netanyahu-led coalition, it would save precious time - and the economy from unaffordable waste. That would be the patriotic thing to do.

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