Deal elusive, but PM and Lapid to meet again soon on budget

A Sunday meeting between Prime Minister Benjamin Netanyahu and Finance Minister Yair Lapid over the 2015 budget ended without agreement, but the two plan to get together again in the coming days to hammer out the final details.

The two men met at the Prime Minister’s Office in Jerusalem and sources indicated that they are close to reaching an understanding.

The two have been at odds over how to pay for the summer’s military campaign in Gaza, and whether to increase borrowing and push through a tax relief plan for some first-time homebuyers.

Reports Saturday said the proposal under consideration would include an additional NIS 6 billion (some $1.7 billion) in defense spending, and would see the national deficit rise to 3.5 percent of gross domestic product

The prime minister had been pushing for an additional NIS 20 billion ($5.5 billion) to be allocated to the defense establishment — NIS 9 billion to cover the costs of Operation Protective Edge in Gaza and NIS 11 billion for upcoming expenses.

Lapid insists that taxes must not be raised and that the government must take steps to improve the lot of Israel’s middle class.

Yesh Atid party chief Lapid, who has been sparring with Netanyahu over the terms for weeks, said Saturday that the sides were close to a deal and that Israel was now able to produce a budget that, even after a year that saw the longest military conflict in 30 years (against Hamas), would not harm social welfare programs, “will not include new taxes,” and will feature clauses to improve education and housing availability.

However, Channel 2 reported that military officials denied that an agreement was on the way.

Meanwhile, the leader of the opposition Labor Party, Isaac Herzog, called Lapid’s claims that the budget would not harm social welfare a “bluff.”

“There will not be a single citizen in Israel whose situation will improve as a result of these agreements,” Herzog said Sunday, according to a report from Walla News. “The achievements that Lapid is presenting are a bluff, because while he makes a big fuss about ostensibly protecting the middle class, he is cutting in education, in welfare and health — cuts that will cause direct and serious harm to the middle class and the weaker sectors.”

Lapid has threatened in past weeks to pull out of the governing coalition if taxes are raised, and has repeatedly pledged that the costs of the 50-day military campaign will not be covered by a tax increase.

The exit of Lapid’s 19-seat Yesh Atid from the coalition would likely necessitate early elections. Lapid’s declared optimism Saturday about a budget deal was seen as an indication that he does not seek to bring down the government.