Israel's Defense Budget Out of Control, Tax Cuts Unrealistic, Expert Warns
Translated & summarized from Globes by baba
Professor Udi Nisan warns Israel's defense budget has ballooned to NIS 160 billion, calling it unsustainable and detrimental to public services. He criticizes the declining education system and a welfare policy that he claims incentivizes not working, particularly among Haredi men. Nisan dismisses prospects of tax cuts, advocating instead for measures to lower the cost of living, and foresees AI transforming the job market, potentially shortening the work week.
The story in 6 lines · by baba
- Israel's defense budget has surged to NIS 160 billion, deemed unsustainable by former official Udi Nisan.
- Nisan warns of a long-term decline in Israel's education system, citing poor PISA results.
- He criticizes welfare policies that disproportionately benefit those choosing not to work.
- Tax cuts are unrealistic due to budget deficits, according to Nisan.
- AI is expected to significantly alter the job market, possibly leading to a four-day work week.
- Nisan believes Israel's potential can be realized with policy shifts towards education and infrastructure.
Professor Udi Nisan, a former head of the Budget Division at the Ministry of Finance and director of the Government Companies Authority, warns that Israel's defense budget has spiraled out of control, reaching NIS 160 billion post-October 7th, up from NIS 65 billion previously. He attributes this to the government's failure to close fronts and the IDF's inability to manage budgets, leading to a projected debt-to-GDP ratio increase from under 60% to 70%. Nisan argues that every additional shekel for defense comes at the expense of education, health, and welfare, and that the current defense budget is unsustainable and will harm growth.
Nisan also criticizes the state of the education system, describing it as being in long-term decline, with 2025 PISA test results for 9th graders being the lowest since 2000 across all subjects. He attributes this to a decline in the quality of teaching candidates, exacerbated by low salaries, poor working conditions, and a lack of respect for the profession. He also points to the need for core curriculum studies, including English and mathematics, for all students, including within the Haredi sector, to prepare them for the job market.
The expert further criticizes Israel's welfare policy, stating it has lost its direction. He argues that while welfare is intended for those with no earning potential, Israel's system, through income-based benefits, disproportionately aids those who choose not to work, particularly among the Haredi male population and some Arab women. Nisan cites a study indicating that a non-Haredi Jewish household pays NIS 3.8 million more in net direct taxes over a lifetime compared to a Haredi household, due to the latter's lower employment rates and higher benefit allocations.
Regarding tax cuts, Nisan dismisses the idea as a "bad joke," stating that the current budget deficits and the erosion of public services make them impossible in the coming years. He asserts that the only way to alleviate household financial burdens is by reducing the cost of living. He points to past successes, like the 2012 cellular reform led by Moshe Kahlon, which significantly lowered phone bills, as an example of what can be achieved when political will is applied to specific projects aimed at reducing living costs.
Looking ahead, Nisan anticipates that artificial intelligence (AI) will dramatically alter the job market, potentially leading to a four-day work week within 5 to 20 years. He stresses the need for the education and healthcare systems to adapt to this new reality, with AI playing a greater role in diagnostics and other services. Despite the challenges, Nisan believes Israel has a strong population and growth potential, but requires a shift in policy focus towards education, human development, and infrastructure to achieve its full potential.