Benjamin Netanyahu did not disappoint. He was quick to blame the war. In his words, "The Israeli economy is strong and is functioning well," and Fitch's lowering of the country's credit rating "is a result of Israel having to cope with a multifront war that was forced on it."
Finance Minister Bezalel Smotrich, who learned the method from the prime minister, was also quick to proclaim that his hands are clean. "I wasn't surprised," he said. "This isn't dramatic. A lower credit rating due to the war is natural."
It takes infinite chutzpah for them to talk about this failed war in the third person, as if they had nothing to do with it. But they are responsible, and how, for the massacre in southern Israel in October and the failure to defeat Hamas to this day. After all, one of them is the prime minister and the other is a senior member of the security cabinet.
It's also clear that they are responsible for the lower credit rating, which paints Israel as a risky country in which to invest. The war isn't the reason for the downgrade. Had the three credit rating companies seen the economy being managed responsibly, with an orderly plan for reducing the deficit and the debt, they wouldn't have cut it. That has happened on previous occasions.
But when they see a delusional, messianic finance minister who is mainly interested not in the economy but rather in annexing territory, and a prime minister who isn't willing to cut spending and raise taxes, it's clear to them that the deficit will continue to climb, growth will evaporate and the ratio of the government's debt to the gross domestic product will rise. And that obligates them to lower the rating.
Fitch was merciful to us. Only now, very belatedly, did it lower our rating, which Moody's did back in February and S&P in April. It's mainly worried over the failure to meet targets.
It expects the deficit to swell to 7.8 percent of GDP this year, compared to a target of 6.6 percent. It's also worried by the rise in the debt-to-GDP ratio, to 70 percent.
Fitch's economists think the government won't do what is necessary to lower the deficit – cutting expenditures, canceling unnecessary tax breaks and implementing reforms. Fitch also thinks the rise in defense spending will become a permanent fixture for years to come.
To understand just how unserious the Netanyahu government is, consider the following: When the last meeting on the 2025 budget took place, in mid-July, the head of the Finance Ministry's budget division, the accountant general, the head of the Tax Authority and the chief economist were all no-shows. That, of course, makes a mockery of the work.
That brief meeting coincided with media reports of the deal to sell Wiz to Google for $23 billion. Prof. Avi Simhon, Netanyahu's economic adviser (actually a political adviser), was quick to hand out the chickens before they were either hatched or counted. There's no need to raise the value-added tax, he said, because a significant portion of the hole in the 2025 budget could be filled with the tax revenue from the sale of Wiz.
But that was patent nonsense. The tax revenue from Wiz would be a one-time windfall, whereas the rise in defense spending is permanent. And the idea is even funnier once you learn that meanwhile, the Wiz deal has been called off. The eggs were not even laid, and the hole in the 2025 budget remains with no solution.
The treasury's economists are now trying to draw up an emergency plan to close this 30-billion-shekel ($8.1 billion) hole. They propose raising VAT and other taxes, freezing government allowances and tax credits at their current level and cutting ministry budgets across the board.
But our arrogant, messianic finance minister, together with the most despicable person in the history of the Jewish people, don't want to impose harsh decrees – not higher taxes, not spending cuts, not even needed out reforms. They are engaging in cynical pre-election spending, on the assumption that the next election will take place in 2025.
Meanwhile, however, they are leading us into a severe economic crisis that will be expressed in higher interest rates, decreased investment, a lower standing of living and steep unemployment. The cut in our credit rating is just the first course. They are leading us to genuine destruction.