From Syria to shekels

On Sunday the vast bulk of Israel''s media was about Syria.

By Tuesday, it had shifted to the budget that Finance Minister Yair Lapid would present to the government.

The background was a sizable deficit in the budgets of recent years, and a greater deficit projected for the present year if there would be no cuts in spending and/or increases in income. One of the international bond agencies reduced Israel''s credit rating.

Explanations for the problem touched on the many elements in government activities, plus the national and international economic trends that affected Israel''s obligations, employment, imports and exports. Prominent were increases in salaries during recent years, and a surge in defense spending prompted by the Iranian nuclear threat.

Yair Lapid brought his new political party (There is a Future) to power by promising to ease the burdens of Israel''s working middle class. By that he meant Israelis who work, support themselves, and pay taxes, as opposed to the growing ultra-Orthodox population that lives off the economic activity of others.

The "middle class" is not something defined with precision. It amounts, more or less, to the population with monthly incomes (after taxes) in the range of ₪10,000 - ₪30,000, which translates to US $2,800 - $8,300. That population already paid income tax rates from 35 to 50 percent, with a value added tax of 17 percent on almost all purchases, special taxes on gasoline, automobiles, and other large items, as well as local property taxes, alcohol and cigarette taxes.

Lapid announced increases in taxes on income and value added taxes, the extension of the value added tax to hotel bills and other expenditures of tourists, higher taxes on alcohol,  tobacco, the purchase of apartments, with yet higher taxes on high end cars and apartments,  as well as a number of cuts in outlays. Monthly payments for children under the age of 18 would be reduced, and would be the same amount for each child. This would eliminate the progressively higher payments per child for large families, which added to the incomes of well as Arab families. He would also cut sharply the payments to religious schools that did not teach a basic program of mathematics and language along with their religious studies. Other reductions would be made in outlays for just about every sector of the government budget. Lapid would cut into the pension benefits of military personnel along with other parts of the defense budget, outlays in the field of transportation that would delay plans for new roads and rail lines, reduce subsidies for medicines, and payments for children’s dental care. He would adjust schedules for subsidized mortgages in order to favor families that worked and had served in the military and reduce the advantages that had been enjoyed by families of yeshiva students, and reduce subsidies for child care that were put into effect in response to social protests during the summer of 2011..

It did not take long for opposition politicians to accuse Lapid of violating his pledges to help the middle class. Advocates for  activities subject to more taxes and less outlays have lamented the damages to be caused. People associated with hotels have argued that imposing a value added tax on tourists'' expenditures would cut into the flow of visitors, cause unemployment throughout their sector, as well as in all the activities supported by the purchases of individuals working in tourism.

The cartoon in Ha''artz shows a sweating Lapid at his computer, while his secretary announces a phone call from Ricky. Lapid had used the imagined family of Ricky Cohen from Hadera as archetypal Israelis with two working parents, two or three children, and barely hanging on to middle class status while paying high taxes that support other Israelis as well as all the other programs of an expensive state.

The Internet edition of Israel Hayom has a picture of a real family from Hadera, with the headline, "Lapid, you disappoint us." It tells of a working couple with three children and a monthly income of ₪ 20,000. The adults voted for Lapid and are frustrated by new burdens of several thousand shekels per year. "Truly we believed him when he made his promises. And now?" 

Laid himself repeated the obvious--also heard from a number of economists--that it is the large middle class with most of the country''s earners and consumers. They must be taxed more heavily and lose some of their services for the sake of economic stability.

Laid also emphasized that he is spreading the burdens more than in the past, both to the Haredim and to the wealthy.

Govmernment budgeting is never a step away from politics. Lapid''s success in bringing his new party to be the second largest party in one election left him with the appetite for a major ministerial appointment. His background in the media but without a high school diploma raised questions about his qualifications. It was well known that the next budget would be draconian in its imposition of taxes and cuts in services. Prime Minister Netanyahu, with his own claims of being an expert in economics who had rationalized Israel''s public sector in previous terms as Finance Minister and Prime Minister, seemed to maneuver the fresh but untrained politician into a position that would test his capacities and perhaps end his career.

So far Lapid has used the talents polished by years in the media to explain and justify his actions, whose details come from one of the ministries that attracts the brightest of Israel''s university graduates.

Netanyahu has not finished with his politicking. He absented himself from the headlines of the budget announcement via a trip to China, and initially declined to comment on the spending cuts and tax increases when questioned by journalists accompanying him in Shanghai.

While on the way to Beijing, the Prime Minister gave a general endorsement to Lapid''s budget, with some reservations about the cuts in spending for defense.  Expectations are that he will decide on issues when he returns home, positioning himself as the wise elder who makes the adjustments that are appropriate.

Money, Syria, and Iran are not the only items in Israel''s media. Current stories also deal with the latest revelations about the Mossad agent who committed suicide while awaiting trial for a serious breach of security, the almost immediate denials of the new details by a Mossad official, the latest maneuvers toward the election of Ashkenazi and Sephardi chief rabbis, charges  of sexual harassment against a prominent media personality, a charge of the same kind brought by a 21 year old congregant against a 75 year old rabbi who fled to Morocco, a country without a treaty of extradition with Israel, a dramatic day in court during the long running trial of former Prime Minister Ehud Olmert and other worthies on charges of corruption, and prospects of another surge of locusts..

Dullsville it is not.