This week, Finance Minister Bezalel Smotrich finally submitted his economic plan for 2025, a long series of tax increases and freezes on wages and welfare spending. Some of these measures are merely negotiation tactics to be chucked out in talks with the other ministers and the lawmakers in the governing coalition.
Prime Minister Benjamin Netanyahu quickly declared – through "an associate" – that he "will not approve provisions that harm the weakest." Yes, he wants Smotrich to take the flak while he plays Mother Theresa.
In any case, it's just a draft and we have to wait a week until the seven-day Sukkot holiday is over and the Finance Ministry chiefs present the proposal to Netanyahu. Then the plan will have to be approved by the cabinet, before it suffers abuse at the hands of our lawmakers.
It's also clear that the Histadrut labor federation won't be keen on things like freezing the minimum wage and crimping pensions and the employee savings plans known as continuing education funds. "They will have to put their dreams back in the drawer," Histadrut Chairman Arnon Bar-David has said.
He has failed at both keeping the deficit low and promoting growth.
The infuriating thing is that Smotrich isn't proposing to cut a shekel from the huge 40 percent increase in the budget for ultra-Orthodox men studying the Torah full-time. They will continue to dodge the draft and not work. In exchange, they'll be receiving more money from the taxes paid by the reservists defending them.
This is insane. Of course, there are also no cuts to the money flowing to the West Bank settlements and outposts. So we're talking about a political finance minister who only cares about his own constituency, an arrogant person who after nearly two years in office doesn't understand his role.
The finance minister's job has two parts. First, he has to keep the budget deficit low, a task he has already failed at. The deficit will be a hefty 7 to 8 percent this year; that's why Moody's and the others lowered their credit ratings for Israel. The deficit for 2025 is supposed to be 4 percent, but that's no sure thing. It depends on how the proposal winds up after going through the cabinet and the Knesset.
The finance minister's job is also to promote economic growth, but Smotrich has failed at this too. Growth in 2024 will end up at 0.5 percent, maybe, and in 2025 it will also be low.
A finance minister has tools for stoking growth like reforming the public sector and opening markets to competition. But Smotrich doesn't plan to carry out any important reforms. He doesn't want to spar with other ministers. He prefers to surrender to their dreams.
A few days ago, he sent a letter to the head of his ministry's Budget Department with a demand to carry out a pilot project at four ministries that will have budgetary independence. This is every minister's fantasy: Do whatever you want with your budget and no oversight. This is also a perplexing forfeit of power, authority and influence by Smotrich.
What does this resemble? It's as if our obstructionist Justice Minister Yariv Levin told the Supreme Court, "I've changed my mind and propose that you choose the court president yourselves, without my intervention. I relinquish my authority, power and worldview."
Levin, the architect of the Netanyahu government's attempt to undermine the judiciary, wouldn't dream of doing this. But, in a different realm, it's exactly what Smotrich is doing: tying his own hands. He doesn't understand that in this way he's killing efficiency and economic growth.
The cabinet members who receive independence over their ministries' budgets will instantly use the money for political purposes, public relations and showy projects to employ activists. Not one shekel will go into investments, not one shekel into growth.
But Smotrich, fueled by arrogance and megalomania, isn't ready to listen and understand. The role of finance minister is several sizes too big for him.