Netanyahu, Lapid step up confrontation over budget

Both Likud and Yesh Atid leaders say they don’t want election or compromise.

By GIL STERN STERN HOFFMAN, LAHAV HARKOV
Yair Lapid (photo credit: MARC ISRAEL SELLEM/THE JERUSALEM POST)
Yair Lapid
(photo credit: MARC ISRAEL SELLEM/THE JERUSALEM POST)
Prime Minister Binyamin Netanyahu and Finance Minister Yair Lapid entrenched themselves deeper in their battle over the 2015 state budget on Sunday after they failed to settle their differences in a long-awaited meeting.
The leaders of Likud and Yesh Atid both said they do not want the election that would be initiated automatically if the budget failed to pass by March 31. But neither expressed willingness to compromise on their top priorities: the defense budget and not substantially raising the deficit for Netanyahu; not raising taxes or abandoning a zero percent VAT housing plan for Lapid.
“The billions we decided to invest in security over the past several years saved the Israeli economy,” Netanyahu said at the International Cybersecurity Conference at Tel Aviv University, citing the Iron Dome missile defense system and the southern border fence. “We were accused of exaggerating in our expenses on defense, but I don’t want to think what would have happened to the Israeli economy without these investments.”
Sources close to Netanyahu said it was the uncompromising behavior of Lapid that was leading the way to an unnecessary general election. Lapid responded in simultaneous interviews on the nightly news shows that the gaps between him and the prime minister were reasonable and could be bridged.
“We were chosen for four years,” Lapid told Channel 10.
“I don’t see any reason to go to an election. I don’t see a reason to dismantle the government. But I have clear redlines, and I will not violate them.”
Rejecting Netanyahu’s demand for an additional NIS 30 billion for the Defense Ministry for the coming years as a result of the costs of Operation Protective Edge, Lapid said, “We can meet defense needs without sending our economy back 20 years.”
Lapid presented Netanyahu with a budget with a target deficit of 3.18 percent that does not include raising taxes and maintains existing fiscal frameworks, including the defense budget. Ahead of the meeting, the Finance Ministry said that, in light of indications of a slowdown in market activity, it would not be wise to raise taxes.
As for the defense budget, the Finance Ministry said the Defense Ministry should stay within the established framework for spending, which “gives a response to the Defense Ministry’s demands as well as to social and civilian needs.”
“We see a great importance in maintaining the spending framework,” Finance Ministry director-general Yael Andoran said before Netanyahu and Lapid met. “The budget that will be presented to the prime minister reflects the correct balance between a target deficit, the Defense Ministry’s demands and a social, civil agenda.”
Economy Minister Naftali Bennett (Bayit Yehudi) warned that the disagreements over the budget could lead to an early election that will cost the country billions of shekels.
Speaking in an interview with Army Radio, Bennett called on Netanyahu and Lapid to act responsibly to agree to a budget and prevent that from happening.
Bennett’s Bayit Yehudi colleague, Finance Committee chairman Nissan Slomiansky, called for the defense budget to be increased, but with limits.
“Security is very important in the State of Israel, but it is not an only child,” he said. “There are other children, like education, health and welfare, which are cornerstones of maintaining a society and country.”
Slomiansky said that during a market slowdown, taxes should not be raised, and ministries’ budgets should not be further cut. Instead, the government should invest in catalysts for growth.
“The defense establishment must compromise on an increase of no more than NIS 5 billion to NIS 6b. in the 2015 budget,” he added.
Opposition leader Isaac Herzog (Labor) said that Netanyahu and Lapid’s continued arguing over the budget is “characteristic of the national paralysis government.” According to Herzog, they paralyzed the country economically, diplomatically and from a security standpoint and the dispute is a direct continuation of that.
“Netanyahu and Lapid are Siamese twins in their economic views and therefore this crisis will end with another budget that hurts the middle and weaker classes,” Herzog said.
Meretz chairwoman Zehava Gal-On called on Netanyahu not to give in to blackmail from the Defense Ministry.
Gal-On admitted that Operation Protective Edge was expensive, but said that the Defense Ministry already has a lot of money.
“Increasing the defense budget will mortgage the country in favor of the army,” she said. “The prime minister will be directly responsible for the breakdown of social services.”