TLR 178: Being for the Benefit of Mr. K
August 24, 2016
Messrs. K and N assure the public
Their production will be second to none…
Having been some months in preparation
A hefty rise is guaranteed for all
Is it a con? Or can Mr. Kahlon pay the bill?
With apologies to the Beatles
This issue has one focus, namely the government budget. However, in order to explain the extraordinary phenomenon of the biennial, or two-year, budget that is being legislated, I have delved into the weird and wonderful history of this Israeli invention, which dates back all the way to 2009. Like most things first employed in economic policy during and after the global financial crisis, no-one would have believed that this ad hoc and emergency measure would take on a life of its own and becoming a semi-permanent fixture of economic management. Yet here we are, with the most carefully-planned version of a biennial budget yet to be attempted.
Thus, having reviewed the history of this concept, I explain why it has been employed once again — spoiler: for political reasons — and who is responsible — spoiler: Netanyahu. But the most important aspect of any budget is its actual contents, and the key elements of the budget are discussed under the “what” heading. This is where “Mr K” — Finance Minister Moshe Kahlon — comes to the fore.
The measures in the budget proposal are the “nitty-gritty” that most concerns economists, but there are seemingly technical matters that may end up having a major influence on which proposals actually survive the legislative process — and of these, the calendar is perhaps the most important. This aspect is analysed in “when”.
Last but not least, there is the question of “whether”, meaning the possibility that political machinations will kill this budget. That is by no means a hypothetical threat, as recent precedents prove — but it does seem very unlikely this year.
a) The etymology and history of biennial budgets
b) The biennial budget of 2017/18