An across-the-board cut is a bad thing, but it is important to be clear: the bad part is not the cut, but the across the board, which is blind. A cut is an adjustment in activity that countries, businesses, and households do on an almost daily basis. When there is a need to finance something important, something else has to be foresworn. That is how responsible people and organizations behave, and that's what we expect from our leaders.
A cut is the setting of priorities and it’s the foundation for the basic budget: preference. The argument that we will finance education by harming health or transport is sheer populism. Profligacy is always easier, as if tomorrow will never come.
There is also the argument that emergencies require special attention. But this is also populism, since the one thing we can always expect is the unexpected. Always, but always, unexpected events happen, which were neither predicted nor known.
It is always possible to catalogue new needs as unexpected events, and to break the budget and rush headlong to a Greek or Spanish scenario. Another positive thing in the budget cutting process: is that all kinds of esoteric projects are discovered, which in retrospect appear much less essential and marvelous than they seemed when initiated.
Defense budget game rules
After countless clashes, wrangling, and - most of all - humiliations, the Ministry of Finance finally learned the rules of game with the Ministry of Defense. That is why the plan to make defense budget supplements subject to streamlining - the efficiencies-receive criteria - that is included in the big adjustment package is no less important than the education chapter of the Trajtenberg report.
During the four years of implementing the Brodet report, Ministry of Finance officials learned that they would always lose, because they would always give in to the Ministry of Defense. So at least, the Ministry of Defense ought to implement the efficiency measures that the Ministry of Finance is demanding and be able to verify their implementation - and it makes resources available.
The solution they found is good and simple: a grocery list of measures, with their price tags attached. You want another NIS 700 million? Privatize Israel Military Industries Ltd. (IMI).
Prime Minister Benjamin Netanyahu and Minister of Finance Yuval Steinitz must now stand in the breach, show some spine against Minister of Defense Ehud Barak, who is already in the front line against the new deal.
Published by Globes [online], Israel business news - www.globes-online.com - on January 5, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012