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Posts Tagged ‘deficit’

Cabinet Passes ‘Austerity Budget’

Tuesday, May 14th, 2013

The Cabinet Monday evening passed a two-year budget, nearly five months late, with tax hikes and across-the-board cuts in spending, Only one minister voted against the  budget, the second and last time it will cover two years instead of one.

Finance Minister Yair Lapid, who is chairman of the Yesh Atid party, said after the vote that the budget is “first stage in changing peoples’ lives in Israel.”

The Value Added Tax on most goods, except food, will rise from 17 percent to 18 percent. Income taxes will rise for upper income families, and ministries will have to get by with last outlays, meaning cuts in services.

Bank of Israel Governor Stanley Fischer announced a surprise quarter-point cut in the interest ate Monday night, two weeks ahead of the end-of-the month decision n whether to change the rate for the following month. He also praised the new budget, which could lead the country out of a huge deficit that has mounted in the past three years following several years of a surplus.

The Left: Getting Rich by Fighting for the Poor

Sunday, March 10th, 2013

Hugo Chavez’s death was met with tributes from Iran, Bolivia, China and El Salvador. The Western left did not waste much time adding their withered roses to El Comandante’s coffin. George Galloway called him another Spartacus. Jimmy Carter described him as a leader who fought for the “neglected and trampled.” Michael Moore praised him for declaring that the oil belongs to the people.

Whether or not the oil belongs to the people is a matter of some debate considering how much of it seemed to end up in Chavez’s pocket.

Chavez died with an estimated net worth of two billion dollars making him the fourth richest man in Venezuela and the 49th richest man in Latin America. For a while, Chavez weathered attacks from the media empire of Gustavo A. Cisneros, the richest man in Venezuela. Then before the 2004 election, their mutual friend Jimmy Carter brokered an agreement between them. Cisneros’ media stopped criticizing Chavez and both men bent to the task of getting even richer.

While the Bolivarian Spartacus lined his pockets with oil money, Venezuela’s middle-class was struggling to get by in a country where the private sector had imploded. Income increased on paper, but decreased in reality as inflation increases ate the difference. Around the same time that Comrade Hugo was launching the third phase of his Bolivarian Revolution, inflation had decreased household income 8.8 percent while consumer goods prices increased 27 percent.

On his deathbed, Hugo Chavez devalued his country’s currency for the fifth time by 32 percent, after tripling the deficit during his previous term when the national debt had increased by 90 percent. From 2008 to 2011, Chavez’s oil-rich government increased the debt by nearly 50 billion in a country of less than 30 million. That same year, The Economist speculated that Venezuela might go bankrupt.

Chavez had swollen the ranks of Venezuela’s public employees to 2.5 million in a country where the 15-64 population numbered only 18 million. With 1 public employee to every 7 working adults, the entire mess was subsidized by oil exports and debt. When the price of oil fell, only debt was left.

Those public employees became Chavez’s campaign staff with no choice but to vote for him or see their positions wiped out to keep the economy from crashing. And they won him one last election.

The dead tyrant leaves behind the lowest GDP growth rate and highest inflation rate in Latin America. He leaves behind an economy where more than half the population depends on government benefits or government jobs. He leaves behind a giant pile of debt for the people and 2 billion dollars in misappropriated oil money for his heirs.

But we don’t need to look to a leftist banana republic south of the border to see how profitable fighting for the poor can be.

Seven of the 10 richest counties in America are now in the Washington D.C. area. Arlington County alone added $6,000 to its average income in one year alone. D.C. and its bedroom communities got rich at twice the rate of the rest of the country and in the last election; Obama won eight of the 10 richest counties in the country.

Washington D.C. is richer than Silicon Valley. Median income in the D.C. area has hit $84,523 despite the city itself having horrendous unemployment and poverty statistics. The top five percent in D.C. earns 60 percent more than the top 5 percent in other cities and 54 times what the bottom fifth earns in that same city.

This wealth of government money isn’t a rising tide that lifts all boats. Income inequality in Washington D.C. is one of the worst in the nation. For families with children, the income inequality level in D.C. is double the average for the rest of the country.

But when you concentrate the wealth of the land in a single imperial city, then you end up with a sharp gap between the poor and the fighters for the poor. Mid-level jobs are disappearing, but high-level jobs continue to grow. Small businesses are going out of business, but lawyers and consultants are being hired at a breathtaking rate.

Washington D.C. has the highest concentration of lawyers in the country. One out of every 12 city residents is a lawyer. One in 25 of the country’s lawyers lives in Washington D.C. In 2009, the Office of Personnel Management reported that there were 31,797 practicing lawyers in the Federal government earning an average salary of $127,500 a year. Or to put it another way, the taxpayers were spending double Hugo Chavez’s two billion dollar net worth each year just to pay the lawyers.

Where’s the Money?

Wednesday, February 13th, 2013

Now that the new Knesset has had its festive swearing-in ceremony, it is going to have to start finding ways to reduce the deficit.  One option is to tax the public.  A second is to reduce services.  But there is another way: track down the big money that goes into inflated salaries and needless positions in the public sector.

The problem there results from the existence of large and still growing groups that developed over the course of decades courtesy of the workers’ committees.  The basic right to strike, which developed in the mines of England as a means of ensuring workers received enough to get by, developed into a powerful interest group’s means of enriching itself at the public’s expense.

The examples are well known: port workers who received huge monthly salaries, by Israeli standards, of 30,000–60,000 NIS; workers at the Israel Electric Company who receive similar salaries and free electricity; employees of Israel Aerospace Industries who joined the Likud en masse and thus guarantee their chairman a place in the Knesset as a kingmaker in the ruling party, where he works to get them salaries and working conditions that are nonexistent in other industries.

These are only the most egregious examples.  And yet, truth be told, the real big money is poured into the pensions of the defense establishment.  Did you know that each year the State of Israel spends about six billion NIS of the national budget on the pensions of career servicemen?  The state already has budgeted 260 billion NIS for career soldiers’ pensions in future years.

Why should a lieutenant colonel who retires at age 45 receive 20,000 NIS every month for the rest of his life?  Very few such people were actually combat troops.  A major or non-commissioned officer who served in an office at the Kirya or in a warehouse at Tel Nof and completed an academic degree in parallel can simply go home at age 45 and receive 9,000 NIS every month until age 120.  Just this past year, the powerful IDF Veterans Association, which represents the interests of former career soldiers, made off with the creation of additional state-funded positions as a gift to future members.

Let’s go back to the new Knesset.  Every month, the state will pay every Knesset member 38,000 NIS.  Each of them will receive a 4,250 NIS budget for clothing per year.  Why?  A Knesset member must look his best.  Of course.  Each member also will be paid 27,500 NIS toward a cell phone every year.  I, for one, pay 1,000 NIS.

Two of the new Knesset members, Itzik Shmuli and Stav Shaffir, were among the leaders of the 2011 social protests in which they chanted, “the people want social justice.”  Indeed.  The gap between them and regular people is intolerable.

Take the example of Miri.  Miri is a much admired teacher who lives in the south Mount Hevron area and travels to Gush Etzion every day to teach in a top school there.  She receives 5,000 NIS per month from the Ministry of Education, much of which goes to paying for fuel to get her to work.  Her neighbor, also a teacher, splits costs with her, and they take the shortest route possible, through Arab villages, in order to reach and teach the Jewish children in their classes.  Why should they receive any less than a non-commissioned officer working at the Kirya or in a command headquarters?  What about the nurses who are overburdened with stress and exhaustion until age 65, laboring away in a collapsing health system lacking staff and money?  Why is there no money to employ more nurses and reduce the load?

The public needs to demand that the members of the Knesset look in the mirror and start off by cutting their own salaries by at least 40 percent, with additional, symbolic cuts, such as doing away with taxpayer-funded boarding at Jerusalem hotels.  Their Knesset offices are outfitted with showers and comfortable sofas—they can sleep at the Knesset once or twice a week.  Knesset Members Yitzchak Berman and Michael Ben Ari used to do that.

Once that is done, they will be able to move on to the next stage: putting an end to the injustices inherent in the public pay scale.  Massive reorganization is needed.  The way to do that is to raise public awareness; stand up to the powerful workers’ committees with the help of patience and public backing; and even take some unpopular steps, such as issuing corrective legislation to end the Labor Courts’ automatic support for strikes.

Can the Knesset members do it?  Is it possible?  Once they’ve made cuts to themselves, it will be much easier to cut away at the fat that is choking the budget.

Originally published in Mekor Rishon. Translated from Hebrew by David Greenberg.

Drinking for the State

Monday, January 7th, 2013

There was a time when the United States government ran on hooch. Hard up for cash, taxes on whiskey and beer funded the Civil War. With 40 percent of government revenues coming from liquor taxes, alcohol made the dramatic post-war expansion of government possible so that by the 20th Century, the Federal government would have been unrecognizable in scope and function to a man of the 1800s, but would have been all too familiar to us.

The Department of Education was created in 1867, the Department of Justice in 1870, the Department of Agriculture in 1862 and the Department of Commerce and Labor in 1903. Within that time, the Federal government had become concerned with every aspect of life throughout the country. After the Civil War, the same whiskey taxes that had paid for cannons, aerial balloons and widows’ pensions began paying for the transformation of the government into a booming engine of social change.

During the same period that the government was being unrecognizably reshaped, the major cities were being transformed by a tremendous immigration boom. Immigration had made it possible for the Union to win the war by providing an endless supply of fresh bodies to throw into the fight. German, Irish and Jewish immigrants came by the hundreds of thousands and made the Union victory possible.

Republican Progressives had looked forward to freeing the slaves, but were far less enthusiastic about filling the country with Catholics and Jews, who were not only bound for Democratic precincts, but did not share their faith. Germany had produced a liberal variant of Judaism that was rather close to Unitarianism and had prospered nicely among upper class Jews in the United States, but the Jewish immigrants who were arriving were members of a more traditional faith in Russia and Eastern Europe. But it was the Catholics who truly worried them.

The Draft Riots during the Civil War had to be put down with the military and the armories were a hulking reminder that the cities could go up in flame at any moment if the Democratic Party’s radicals chose to light a match. Those same Catholic immigrants had been invaluable to building the Union, but with the South defeated, and the expansion of the Union underway, they had become a problem.

Progressive reformers cast an uneasy eye on the slums and the Democratic political machines that ran them and pursued a grab bag of strategies for curing their ills, from birth control to temperance to socialism.

The progressive vision of a New America was being funded by liquor taxes, but a combination of bigotry and health-nuttery, which was another of the elements of the modern country taking off, brought quite a few reformers around to temperance. Associating Catholics with liquor, they went after liquor itself. But liquor could not be outlawed, without also outlawing big government.

For the practical politician the link between liquor and big government was a web that should not be touched. The drinking American was making big government possible and should be left to drink in peace. But progressive reformers are ever deaf to such logic and quick to cut Gordian knots. Faced with a liquor revenue problem, they contrived a solution in the form of the personal income tax.

The personal income tax was unconstitutional, but with the end of the post-Civil War era and the revival of the Democratic Party as a progressive political movement, the country had entered a period where the Constitution meant very little. During the Wilson and Roosevelt administrations, that document, then not very much more than a century old, had come to be regarded as an outmoded work with very little relevance to modern times.

The Anti-Saloon League, rising out of the mists of an uncertain time, had assembled a coalition encompassing Klansmen, Suffragists, Socialists and Preachers focused on a single-minded agenda, but pushing whatever laws it had to along the way to reach its goal. And the road to Prohibition lay through such policy territories as the personal income tax.

Prohibition today is remembered mainly for the quaint scenes of smugglers and lawmen chasing each other on dark roads, speakeasies where liquor made in massive illegal stills was served and the end of national integrity as an age of national hypocrisy was ushered in by wet politicians who voted dry. But Prohibition as a phenomenon matters little compared to the ways in which the campaign to achieve it and then hold on to it transformed the country.

Printed from: http://www.jewishpress.com/indepth/columns/daniel-greenfield/drinking-for-the-state/2013/01/07/

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