Netanyahu, Lapid nearing compromise on 2015 budget despite tough talk

Netanyahu: Any responsible leader would increase defense spending; coalition sources say PM, Lapid done politicking, ready to seriously outline budget.

Prime Minister Binyamin Netanyahu (R) and Finance Minister Yair Lapid embrace in the Knesset. (photo credit: REUTERS)
Prime Minister Binyamin Netanyahu (R) and Finance Minister Yair Lapid embrace in the Knesset.
(photo credit: REUTERS)
Prime Minister Binyamin Netanyahu and Finance Minister Yair Lapid are ready to moderate their opposing stances on the 2015 budget and leave politics behind, coalition sources said Monday.
“The gaps are shrinking in the main arguments between the prime minister and finance minister and I believe that by the weekend or the beginning of next week they will come to an agreement,” the coalition’s coordinator in the Knesset Finance Committee, MK Gila Gamliel (Likud), told The Jerusalem Post.
The main sticking points are Lapid’s insistence on passing his flagship 0% VAT on housing bill without raising taxes, swelling the deficit significantly, which Netanyahu opposes, and the prime minister’s call to raise the defense budget by NIS 11b., while Lapid thinks a smaller budget increase would suffice.
At an event in honor of Rosh Hashana at the Prime Minister’s Office Monday, Netanyahu said: “We always need to defend ourselves. That was and remains our first and greatest goal, because everything else is possible because of our security.”
Netanyahu said any responsible leader would not increase the defense budget in light of the many threats Israel faces, calling for a “significant increase of many billions.”
Despite the tough talk, a senior coalition source said the two are ready to compromise and attributed their earlier not budging from their stances to political reasons.
Netanyahu thought Lapid wanted to leave the coalition either to force an election or to sit in the opposition, while the finance minister thought the prime minister wanted to boot his Yesh Atid party from the government and replace it with haredi parties, the source explained.
Politicians and advisers close to both parties – Gamliel, Knesset House Committee chairman Tzachi Hanegbi (Likud), Yesh Atid faction chairman Ofer Shelah, and Lapid’s economic adviser Uri Shani – worked to clear the air. Now both sides are likely to get what they want, but at a price: a defense budget hike, no new taxes, and an increased deficit.
“The minute [Netanyahu and Lapid] stopped suspecting each other, things became serious and not political,” the source stated. “They talked about the issues and Lapid said publicly that he doesn’t want elections, so they’re going back to normal.”
However, the source admitted that the two have yet to schedule a meeting to come up with a budget outline, after several were canceled in recent weeks and those that took place, like one on Sunday, ended without any progress.
Meanwhile, on Monday, Defense Minister Moshe Ya’alon both talked up the importance of increasing the defense budget.
Ya’alon told Tel Aviv University’s International Cybersecurity Conference that without the Iron Dome, Merkava tanks, and advanced intelligence gathering for defending against cyber and other attacks – which cost billions of shekels – the situation would be unimaginable.
The defense minister also said that increased funding is needed to resupply the air force with precise munitions.
Ya’alon reframed the budget debate as being about restoring balance, saying that defense spending was cut “for political reasons” in the past, and that he does not want additional funds. Rather, “fixing a distortion” is necessary.
The IDF had already had to cut defense exercises leading up to the recent Gaza war, he pointed out.
“Security costs money; there are no cheap wars,” Ya’alon stated, adding that the war’s damage would have been much worse without the state’s advanced defense capabilities.
Opposition leader Isaac Herzog said Netanyahu and Lapid’s continued dispute over the budget is motivated by ego and that the citizens of Israel, the middle class, and the poor will lose out.
“Labor will fight this budget, which will deepen social gaps. We are prepared for an election whether they’re tomorrow or in two years,” Herzog said on a visit to the South with his faction.
Meretz leader Zehava Gal- On also said that Lapid and Netanyahu’s “political quarrel creates uncertainty and endangers not only the market’s stability, but short-term growth, mainly by decreasing consumption and leading people to prefer to save money.”
Gal-On called for the two to put their egos aside and publicize a general framework for the 2015 budget this week.
Yonah Jeremy Bob contributed to this report.