The Israeli press is used to reporting on the prime minister’s political zigzags, but his recent economic U-turn — opting to increase the state’s deficit rather than follow his traditional mainstays of budget cuts and tax increases — made front page headlines in nearly all the papers this morning.
Israel Hayom is quick with the platitudes announcing in its top headline: “The tiding: deficit will increase, taxes won’t.”
Yedioth Ahronoth also leads the paper with the fiscal policy shocker, but takes a more cynical approach with its top headline reading: “Election economics.” The article stated that Prime Minister Netanyahu and his finance minister Yuval Steinitz chose to ignore the recommendations of the Bank of Israel and the treasury’s budget department by doubling the deficit instead of following through with planned budget cuts and tax hikes. The assumption in the article is that in an election year, Netanyahu is willing to backtrack on even his most stringent policies in order not to alienate potential voters. The report also commented that the move is a slap in Steinitz’s face noting that it is not the first time Netanyahu has pulled the chair out from under his finance minister.
Haaretz plays it straight in the headline, simply announcing “The prime minister is increasing the budget deficit instead of raising taxes,” but is quick to include the opposition’s response that the move is merely a band-aid meant to placate social protesters.
Maariv meanwhile ignores the deficit announcement on its front page, featuring a top headline reporting on threats by the Weizmann Institute’s president to boycott the Ariel University Center of Samaria if, as anticipated, the Higher Education Council decides to upgrade it to full university status. Prof. Daniel Zajfman, who heads one of Israel’s most prestigious research centers says he will quit the Council and cut ties with it if the college, located in the West Bank settlement of Ariel, gets recognized as a fully fledged university. The stark opposition, the article explained, is due to a mixture of political and financial objections.
Yedioth Ahronoth gives front page billing to the most recent development in the ongoing talks over ultra-Orthodox enlistment. The story tells that the Plesner Committee, which is hard at work legislating a new law to replace the unconstitutional Tal Law regulating the mandatory draft, has decided that the maximum enlistment age for haredi men would be 23, an age by which most haredi men already have children. The implications of the decision according to the article is that the army will have to pay them up to ten times the normal military salary and that they will not be posted to combat roles. Critics caled the move political trickery.
On the same topic, Maariv reports on page 8 that Netanyahu is considering asking the High Court for an extension for the legislation deadline, past the end of July, so that he can strike a deal with the religious parties in his coalition.
Israel Hayom, Maariv and Haaretz all feature large photos on their front page of airplanes spreading fire-retardant on woodlands surrounding Jerusalem in an effort to battle a forest fire that broke out in the area yesterday. The caption in all three papers states that police suspect deliberate arson behind the fire, though no immediate suspects have been found. Maariv reported on page 5 that yesterday’s fires were but two out of 284 fires to hit the Jerusalem hills since the beginning of June and that 60 percent of them are believed to be the result of ideologically driven arson.
Deficit increase — for and against
Israel Hayom’s Hezi Sternlicht came out in favor of the deficit increase, as long as it remains moderate. Sternlicht conceded that there are risks to the move, but asserts that the benefits of keeping the budget more or less intact outweigh them. He offers Greece as an example of how extreme budget cuts have had a negative effect on the economy. Sternlicht is also quick to explain that financial considerations, not fear of renewed social protests, triggered the decision. He concluded that, like alcohol, increased deficits are fine if used in moderation, but warns the ministers of getting punch drunk on their new tonic.
In Yedioth, Gideon Eshet criticized Netanyahu’s decision to increase the deficit, and claimed it was a populist act meant to ease pressure on the government by shirking the interest costs on the tax-paying public. Eshet writes that by increasing the deficit, Netanyahu and Steinitz can follow through on election promises without having to worry too much about costs. “It reduces their headache but not that of the public. We are the ones who will have to pay back the deficit, as well as its interest. Only instead of paying now, we will pay later. Luckily for them they have no opposition since Labor chairwoman Shelly Yachimovich is a longtime supporter of deficit increases,” writes Eshet.