There is only one word to describe the budget performance figures: scandalous. It is the only way to summarize a year which ended with a budget deficit of 4.2% of GDP, instead of the 2% planned, in other words, a deficit that was more than NIS 20 billion above the original.
If these were the results meant by Minister of Finance Yuval Steinitz when he spoke about "responsible policy", then someone should explain to him the meaning of the word "responsible". We can only ridicule Steinitz's statement that no new taxes will be needed to plug the budget blowout.
In the coming days, Steinitz will presumably explain that the budget hole was due to unexpected developments, which reduced tax revenues. He will also cite defense demands that Prime Minister Benjamin Netanyahu and Minister of Defense Ehud Barak added to the budget without fiscal consideration. But the finance minister and the prime minister brought upon themselves a situation in which they could not respond to these developments through the hallucinatory invention of the biennial budget.
The biennial budget was supposed to the protect the prime minister and finance minister from debating economic policy in the Knesset for two years. They sought political immunity, but instead created an economic policy that could not respond to any new conditions, and the public does not really know about fiscal trends. The current projections were published in 2010 on the basis of the prevailing conditions at that time.
All that is now left for Netanyahu and Steinitz in the face of the unexpected was to improvise. The social protest? Cut the excise on gasoline. Home prices are skyrocketing? Cut the betterment tax. It was all a bluff, with no planning or public or Knesset debate. What happened when the Ministry of Defense began to consider the taxpayers' money as an endless ATM printing press? The Ministry of Finance simply went to the Knesset Finance Committee, and the result was that we, the people, have no way of knowing whether NIS 11 billion was spent on planning an attack on Iran.
What's next? Until April-May the NIS 20 billion budget hole will remain an abstraction that will not affect daily life. But in the second half of the year, each and every household and business will feel the deficit. When that happens, Steinitz will find himself facing many microphones as he attempts to defend himself from many politicians from his own and other political parties who make him solely responsible for the loss of fiscal control in 2012.
Published by Globes [online], Israel business news - www.globes-online.com - on January 13, 2013
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