Finance Minister Bibi and Prime Minister Netanyahu: One Man Two Ideologies

When Benjamin Netanyahu was the Minister of Treasury Ideology was a top priority and the deficit targets were meticulously maintained. So why isn't Prime Minister Benjamin Netanyahu excited about the big deviation from the targets?

Finance Minister Bibi and Prime Minister Netanyahu: One Man Two Ideologies

(In video: 2019 budget transfer)

Finance Minister Netanyahu's credit can be attributed to a very important thing: he had an ideology. Unlike many of the politicians, he did not hide his ideology, and acted to implement it even when it was unpopular. At the same time, Netanyahu's Minister of Finance's ideology was that the government should spend as little, or in its words, the lean man (the private sector) should stop carrying the fat man (the public sector) on his back.

It is true that he did not invent this ideology. Israeli governments, since 1985, have taken steps in this direction. The Rabin government, for example, privatized more private companies than it did during Netanyahu's term as finance minister and prime minister. But unlike finance ministers who came before him, Finance Minister Netanyahu turned the policy into an ideology, and on that occasion he set the direction Israel has followed since. And to make sure governments that come after his term as finance minister continue to follow the same ideology he dictated, Finance Minister Netanyahu has enacted a law designed to ensure that the deficit does not increase too much. Because Finance Minister Netanyahu knew that the easiest way for the government to increase the public sector was to increase debt, so he enacted a law designed to prevent it.

This law is called the Spending Rule. In his original version, the one that Finance Minister Netanyahu had to convey, it was stipulated that the government budget should not increase by more than one percent from one year to the next. In this way Finance Minister Netanyahu wanted to make sure two things. The first is that no government will incur expenses without having to pay where. And the second, that the public sector in Israel will decrease, to give more space to the private sector.

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What will Minister of Finance Netanyahu think of Prime Minister Netanyahu?

Finance Minister Netanyahu believed that this was the right policy for Israel, that he was willing to pay a fair political price for it. In the first election held after Netanyahu's term as finance minister, the Likud headed by him crashed to just 12 seats.

Prime Minister Netanyahu, on the other hand, proved this week that Moshe Dayan's statement that only a donkey doesn't change his mind always remains relevant. Because this week, the Treasury economists announced that the policy of the previous government had led to a deficit of 4% next year, a deviation of 2% from the planned target. Their conclusion was that every future government would have to choose between raising taxes and spending cuts. Netanyahu corrected them, saying there would be no need for cuts or tax cuts, because even if the deficit is significantly higher than planned, it is not something to be excited about.

I wonder what he would say about Finance Minister Netanyahu, who is fighting so hard to ensure that Israeli governments set themselves low deficit targets, and do whatever it takes to meet them. Even more interesting is what he would say, when he heard that the prime minister, who was prepared to produce a much larger deficit than was planned, called Benjamin Netanyahu.

Dr. Avihay Snir - Netanya Academic College and Infinity Investment House