Middle Israel: The 2019 election’s first loser

Moshe Kahlon squandered his political calling, and left an economic mess.

Moshe Kahlon at a weekly cabinet meeting, December 23rd, 2018 (photo credit: MARC ISRAEL SELLEM/THE JERUSALEM POST)
Moshe Kahlon at a weekly cabinet meeting, December 23rd, 2018
It could have been his finest hour.
After he won a handsome 10 Knesset seats with his young Kulanu Party, all eyes were set on Moshe Kahlon. The math was simple: Isaac Herzog, with 24 seats, could not establish a coalition at all, and Benjamin Netanyahu, with 30, could not assemble one without Kahlon.
Kahlon was therefore in a position to force a Netanyahu-Herzog government, as this newspaper noted on its front page of 18 March, the morning after the 2015 election. Kahlon, we wrote, “can either take a perk from Bibi and then follow his lead, as he already did in the past, or he can jump into the waters, swim ahead, and then look back and learn what it feels like to be followed by an entire nation.”
Four years on, Kahlon’s failure to heed our advice looms as a colossal political mistake – socially, politically, economically and morally.
SOCIALLY, THE humbly born Kahlon’s imposition of unity would have symbolized the prevalence of Givat Olga – the slum from which he proceeded to law school, the Knesset, the government and the security cabinet – over nearby Caesarea, the ultrarich town where Netanyahu leads his lavish life.
Politically, the broad government Kahlon could have welded would have reflected the will of Kahlon’s voters, many of whom had previously voted for Yair Lapid. Consequently, the same Kahlon who now is teetering on the brink of electoral extinction would have emerged as the principled pragmatist for which Benny Gantz is now being widely taken, a posture that a critical mass of voters evidently crave.
Better yet, had he imposed a unity government four years ago, Kahlon could have presided over the political reform that back then both Netanyahu and Herzog were prepared to pass. Such a reform would have given the leader of the largest party the first opportunity to form a government. Voters would then have preferred to vote for large parties rather than for the satellites that orbit them, splintering the political system and diverting budgets for sectarian causes.
Kahlon, for his part, would have emerged not only as the national power broker, but as a reformer, and therefore an eligible heir for Netanyahu as the Likud’s next leader, the aim for which Kahlon left the Likud and set up his own party in the first place. Whether from within the Likud or outside it, Kahlon would have become the axis around which the system revolves.
Tragically, blinded by his sudden success and seduced by the Treasury that he now was offered, Kahlon chose opportunity over destiny, deluding himself that he would use his new power not to bridge between Right and Left, but to push easy money to society’s bottom from its top.
SHOWERING THE have-nots with other people’s money is an ancient quest, and Kahlon’s was understandable and initially also seemed measured.
During his four years at the Treasury, minimum pay rose incrementally by nearly 25%, to a monthly NIS 5,300, while all major taxes were left unchanged, other than value-added tax, which he clipped from 18% to 17%.
Kahlon’s effort to reduce housing prices was also reasonable, as he accelerated state-owned real estate’s arrival in the construction market, and set out to further push down prices by tendering land to the contractor who commits in advance to the lowest retail price per apartment.
The consequent cooling of the overheated housing market – prices last year declined 1.4%, after rising nearly 100% since last decade – is an achievement in which Kahlon rightly takes pride. However, beyond this effort loomed an eagerness to play Santa Claus, an urge that backfired both economically and politically.
Refusing to do battle with strong unions, Kahlon struck an alliance with Histadrut labor federation leader Avi Nissenkorn. It was a Faustian bargain.
Politically, Nissenkorn betrayed Kahlon, leading him to believe he would join his ticket only to ultimately join Gantz. Economically, the alliance diluted reform – for instance, of the famously overstaffed and wasteful Israel Electric Corporation, which rather than be fully sold was made to sell only five of its 17 power stations.
Kahlon’s unholy alliance with the unions also generated a deal to raise the Israel Police’s wages and pensions by an aggregate NIS 15 billion over the next 15 years, thus opening the road for other employees across the public sector to raise similar demands and uncork inflation.
While that surrender benefits only 32,000 cops, Kahlon’s credit-card reform was designed to ingratiate millions, putting cash in their pockets by decoupling plastic money from the banks, thus easing depositors’ credit limits, and tempting people to use credit not for investment, but for consumer loans.
Worse, Kahlon planned to lower the minimum down payment for first-time mortgage borrowers, from 25% to 10% of a purchased apartment’s price. Such moves, which encourage the poor to borrow more than they will be able to repay, sparked the American subprime crisis.
ECONOMIC GRAVITY is merciless, and there is no fooling it.
Kahlon’s generosity tore open the budget deficit, which last year soared to 3.3% of gross domestic product, breaching the official target of 2.9%. Worse, public debt, which over the previous eight years had slid steadily from 80% to 60.5% of GDP, last year reversed course and climbed to 61.2% of GDP.
Now, abandoned by his main lawmakers and ministers and – according to polls – also by half his voters, Kahlon has evidently failed in his political gambit no less than in his economic ploys.
Such, then, are the social damage, economic setbacks and political demise that followed Kahlon’s failure to seize his moment in 2015.
Overarching all these is what could have been the opposite choice’s moral effect. For had Kahlon imposed unity, Netanyahu would have been humbled; humbled enough to avoid the arrogance, conceit and overconfidence that landed him where he has now arrived.

The writer’s new book,
Mitz’ad Ha’ivelet Hayehudi (The Jewish March of Folly, Yediot Books, 2019), is an Israeli interpretation of the Jewish people’s political history.