Bibi’s pandemic economics
Can the prime minister take the necessary steps to revive the economy?
Herbert Hoover was a lame duck president when he handwrote a personal letter to Franklin D. Roosevelt and gave it to a Secret Service agent who found the president-elect in a journalists’ banquet, and discreetly handed him the 10-page plea.
It was more than three months since his crushing defeat at the ballots, but the patriotic Hoover lost none of his sense of civic duty. Facing renewed runs on banks, he begged Roosevelt to make announcements that would calm the people.
“It would steady the country greatly,” wrote the departing president, “if there could be prompt assurance that… the budget will be unquestionably balanced even if further taxation is necessary.” response to the economic crisis were tactical, analytical and, above all, emotional.
On the tactical front, Netanyahu undermined and sidelined good people who could have helped his effort, most notably Naftali Bennett, whose response to the pandemic as defense minister impressed even his political adversaries. Rather than empower Bennett, Netanyahu disposed of him.
This week the syndrome repeated itself, when Netanyahu left Finance Minister Israel Katz out of a consultation he held with former Bank of Israel governor Stanley Fischer and current Governor Amir Yaron. Katz is Netanyahu’s own appointee for treating the coronavirus economy. How is he supposed to work under such a humiliating boss? when he festively approved NIS 100 billion in stimulus spending.
What we do know is that payments to middle-income people whose livelihoods were shattered were released slowly and stingily, and subjected to petty demands like demonstrating a 25% decrease in this spring’s turnover compared with last spring’s.
That is why, by the Finance Ministry’s own admission this week, it has so far used only 47% of that NIS 100b. which, at roughly 8% of GDP, was to begin with much lower than stimulus packages of other developed economies like Japan (21%), the US (13%), Sweden (12%), Germany (10.7%) and France (9.3%).
That is why it was so appalling to hear Netanyahu claim, in a Zoom meeting Tuesday with devastated restaurateurs, “I thought [the recipient] enters [the Tax Authority’s website], clicks… and the money goes out immediately,” and then reprimand Tax Authority Director Eran Yaakov: “I demand of you that it be done this way; make the corrections!”
The taxman, a professional lawyer and accountant, said nothing during the meeting, but the following day he released data showing his agency did as it was told, approving a total of NIS 1.658b. in payments to 79,574 recipients out of 90,453 applicants.
The bureaucracy, in other words, did its job. The problem lay in the instructions it got, and the problem with the instructions was the prime minister’s delusion that the economic coronavirus will evaporate come summer, in the spirit of his premature, sweeping and fateful rush to reopen the schools.
Sadly, the pandemic is going nowhere, and all planning must assume it will stick around at least until this time next year. In the interim, it will be the government’s duty to do what for Netanyahu-the-monetarist is as emotionally hard to do as it was for Hoover-the-Republican: spend.
Plans vary concerning what needs to be done next.
Finance Minister Katz wants to give unemployed wage earners “enhanced unemployment payments” and “monthly living stipends” to business
owners whose businesses have been “significantly hurt.”
Former Jerusalem mayor, and aspiring finance minister, Nir Barkat suggests assorted handout formulas, like granting NIS 28b. to 60,000 businesses whose turnovers dropped by more than 50%, and compensating businesses with smaller losses by giving
them 25% of their pandemic losses if their annual income is less than NIS 20 million, and 12.5% if they are bigger than that.
Former Bank of Israel governor Karnit Flug suggests canceling time limits on unemployment wages as long as the jobless rate is in double digits. In addition, the jobless
should be offered economically empowering training courses in subjects like English or digital literacy.
Most effectively and urgently, the Bank of Israel is preparing a plan that will allow a six-month postponement of mortgage and business loans repayments.
And the ideas flow on and
on, all plausible, and many will surely be implemented, if only Netanyahu can make the intellectual journey from Hoover to Roosevelt, and the emotional transition from arrogance to humility.
Once humble, the Netanyahu who boasted that his handling of the pandemic is a global role model – will vanish,
as will the soloist who shed Bennett and humiliated Katz, and the infallible genius who rather than accept his own blame blamed the innocent taxman, just like he blamed his legal travails on the blameless judiciary, and his fumbling of the coronavirus’s budgeting on the Knesset.
Chances of all this happening
are of course high; as high as chances were that Hoover will deliver the New Deal.
Amotz Asa-El’s bestselling Mitzad Ha’ivelet Ha’yehudi (The Jewish March of Folly, Yediot Sefarim, 2019), is a revisionist history of the Jewish people’s leadership from antiquity to modernity. •