1. Benjamin Netanyahu has lost control of the economy. It started in a hasty moment three years ago, when the newly elected prime minister decided in favor of Histadrut (General Federation of Labor in Israel) chairman Ofer Eini and the agriculture lobby, and re-sanctified the VAT exemption on fresh produce. He thus forewent annual revenue of NIS 2 billion and equality of treatment in VAT. Since then, it has seemed to him that he was getting lots of free lunches. He guzzled them down, but he knew that the situation in the US, in Europe, and in China was growing worse, and would affect Israel badly. At a certain point, Netanyahu looked for someone on whom to lay the blame. He searched and searched, until he looked in the mirror, saw his own image, and realized that the crisis was at hand, that 2103 would be one of the toughest years Israel has known, and that he was the gatekeeper at the entrance to it. To his credit, it should be said that the moment he stopped making up excuses for himself, and that happened only last week, he got down to work immediately.

2. About NIS 30 billion that’s the amount that will be added to expenditure in the 2013 budget because of decisions about spreading spending over several years that the government has taken in recent years, and routine rises in spending because of the rise in the number of children, and higher pensions and health costs.

A source of finance for this amount will have to be found, besides for other regular spending in the budget, such as salaries NIS 100 billion; defense over NIS 60 billion; the National Insurance Institute NIS 70 billion; debt servicing about NIS 35 billion; and so on and so forth.

Of course, each item looks reasonable, sensible, necessary, and what not. The doctors work hard at night, university lecturers are important, contract workers are miserable, the defense establishment is coping with threats, and so on. The problem is that this accumulation of expenditures has brought us to the precipice.

3. Here is a partial list of other automatic items in the 2013 budget. The transport plan: shortly after this government took power, the prime minister presented the NIS 67 billion multi-year plan of Minister of Transport Yisrael Katz. After pressure was brought to bear by the Ministry of Finance, the plan was pared down to NIS 27.5 billion. That means NIS 5-6 billion next year, including financing of the Tel Aviv light rail and the Haifa mass transit project. The wage agreement signed with the Histadrut will cost NIS 6 billion in 2013…Read More>>

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