While the United States just passed a trillion dollar stimulus package that includes funding for projects such as $650 million for digital converter boxes, $50 million for the National Endowment of the Arts, and $1.3 billion for Amtrak, Israel’s Benjamin Netanyahu is planning on turning around Israel’s economy through tax cuts and liberalizing the real estate market. Fortunately for Israelis, Netanyahu’s steps to reduce the size and scope of government as finance minister put the country in decent shape to weather this current recession:
By the time Netanyahu left the finance ministry in 2005 to protest the government’s withdrawal from the Gaza Strip, he had sold or begun selling El Al Israeli Airlines Ltd., the biggest carrier; Bezeq Ltd., the biggest telecommunications provider; and Israel Discount Bank Ltd., the third-largest lender.
“It’s very important to create an internal engine by reining in the size of government, cutting taxes and the bureaucracy,” said Ohad Marani, who served as the top aide during Netanyahu’s first year as finance minister. “He’s very much for small government.”
By cutting spending, Netanyahu helped reduce Israel’s budget deficit to 1.8 percent of GDP in 2005 from 5.1 percent in 2003. The TA-25 plunged 5.2 percent the day he announced he was stepping down. The deficit may reach 5 percent of GDP this year, Ben Bassat estimates.
