New Economic Plan an Opportunity for New Netanyahu-Kahlon Tension

After the apparent resolution of the last point of tension between them – the struggle for survival between the Israel Broadcasting Authority and the Israel Broadcasting Corporation – tension broke out anew between Prime Minister Binyamin Netanyahu and Finance Minister Moshe Kahlon when the latter announced tax reforms Tuesday for working families – without discussing them in advance with Netanyahu. That did not sit well with Likud MK Yoav Kisch, chairman of the Knesset Control Committee, who called Kahlon’s decision-making process “wrong-headed.”

Stressing that he was speaking on behalf of other Likud MKs, Kisch told Yediot Acharonot Wednesday that “it appears that there were ego issues involved with Kahlon deciding to act in this manner. It’s a good plan, but at the end of the day Kahlon is not the boss and he does not control the state budget. He is part of a government, and all important decisions require the consent of the government.”

In a gala press conference Tuesday, Kahlon presented the main points of “his” plan, called “Family Net,” which promises significant tax breaks and subsidies for working families and middle-class Israelis. Among the highlights: Additional tax discounts for families where two parents work, with even lower rates for working families with children six and under; government subsidies for after-school programs, with a cap of NIS 930 per month on costs for the programs; transfer payments for individuals who earn NIS 5,000 or less; and cancellation of import duties on children’s clothing and shoes.

“Whoever thinks that the job of a finance minister is to be a glorified accountant is mistaken,” Kahlon said at the lengthy news conference, in which he avoided mentioning Netanyahu’s name even once. “I see my job as fighting the interest groups and powerful institutions in an intelligent manner.” Among the other reforms he has proposed, he said, are  unemployment insurance benefits for self-employed workers, and an increase in cash payments for disabled and elderly Israelis. Kahlon did not put a price tag on the plan, but economists speaking on Channel Two Tuesday estimated that it would cost about NIS 5 billion a year.

Despite his not being informed, sources close to Netanyahu said that he saw the plan in a positive light, and that it contained “good ideas. Our policy is to reduce the cost of living and encourage people to work, and these ideas are definitely a step in that direction.” Speaking Wednesday, Kahlon said that he was not familiar with any “tension” surrounding his plan. “Everyone who has seen the details supports it,” he said. “It will be discussed in the government, and approved, I am sure.”

Kisch wasn’t so sure. While he was confident in the future of the Likud and of Netanyahu as prime minister, the backbiting between the two had to stop, he told Yediot Acharonot. “We have to see where we go from here,” he said. “It’s clear that if relations are going to get worse and more crises are in the offing, we are likely to find ourselves facing elections. Developments like the one that took place Tuesday do nothing to enhance the good relations we need.”

Kahlon’s news conference was widely seen by political observers as “payback” for the IBA/IBC imbroglio, which he was seen as “losing.” Kahlon sided with the closure of the IBA, but in the end agreed to a compromise deal, which entails relieving the two heads of the IBC – Gil Omer and Eldad Kovlantz – of most of their responsibilities in the production of news programs. A separate organization that will be responsible for news broadcasts will be set up, and it will draw its staff from the IBA workers who are set to lose their jobs on April 30th, when the Authority officially closes down. Politicians on the left have been livid over the move, claiming that it was a bid by Netanyahu to control the media. Netanyahu had originally been in favor of replacing the IBA with the IBC, but changed his mind, apparently because he felt that the staff being gathered to run the organization was radically leftist.