Thursday, February 16, 2006

The budget fiasco

Yesterday parliament passed the budget for 2006. It was how the budget was passed which was most embarrassing, rather than the passage itself. 34 MP's left the chamber during the voting in protest over the way the vote was conducted.

Actually two factors were cited in the protest, the second was that the members of the finance committee were voting against their own recommendations. As far as I can gather, this is what happened:

  1. The members of the finance committee voted for Abdallah Akaileh to be the chair over the objections of the supporters of Hashem Dabbas. Since Dabbas is a member of Abdulhadi Majjali's parliamentary block, new elections were held so that he could chair the committee.
  2. The committee made it's recommendations, which included a new tax on cell phone calls and on transactions in the stock market, as well as shaving money from some projects that the government wants to implement.
  3. The government was not happy with the recommendations, because some of the projects that were to be axed are already committed to (I don't know how the government committed to projects it doesn't yet have funding for), and it thought that the taxes would hurt the telecommunications industry and the stock market. I for one believe that since I have to pay taxes after working my butt off, then people who make money in the stock market should pay as well. In any case, what I think is beyond the point.
  4. The government lobbied Majjali and members of parliament (including members of the finance committee) to reject the proposed amendments, and renegotiated cuts to the tune of 56 million dinars.
  5. My guess is that Majjali wasn't sure that the votes were there to defeat the amendments that the government didn't like, so he engineered the voting in a way that would confuse the MP's. MP's complained that they didn't know what they were voting for.
  6. The 34 MP's walked out of the voting, and seven stayed to vote against, with about 68 voting for the budget as it passed. The exact numbers were not announced.
  7. The budget passed with cuts of three million dinars, rather than the 56 million negotiated with the finance committee.

So, after a week of boring speeches and rhetoric, the budget passed essentially unchanged. It seems to me that Majjali put his reputation on the line to get this done, and he will pay in some way in the future. Many IAF and other deputies strongly criticized him during the session. Abderaouf Rawabdeh made his opening comeback salvo yesterday. Read all about it in the Al Ghad article.

As I argued before, the budget discussion revolves over details and ignores fundamental problems related to the over staffing of the government. Thus, the finance committee suggested most of the cuts to be from capital expenditures rather than running costs. While this is expedient, it is bad management. What good is it to have a bunch of employees in the Ministry of Public Works, for example, who are paid salaries but don't have money to spend on building and maintaining roads? Thus, in principle I believe that cuts in capital expenditures are not prudent although they may be more expedient. Thus, since nobody is suggesting to cut the fat out of the bureaucracy, then this outcome is the second best alternative.


At 6:33 AM, Blogger Unknown said...

This comment has been removed by a blog administrator.

At 6:54 AM, Blogger Unknown said...

Khalaf, you talked before about the need for deep cuts into the fat of government bureaucracy.You also suggested that the Parliament should force the government toward these cuts! The fat of bureacuracy is kept and developed in the first place becuase of PMs asking their :minister" friends to appoint members their constituency( tribal members and relatives). So I do not really see, how can we do that? The question really is whether to blame the government, the Parliament or both!!!?

At 7:26 AM, Blogger Khalaf said...

Hi Issam: You are 100% right. That is why nobody responsible would make such a suggestion. The only way this might happen is if a political party adopted a plan based on lower taxes and smaller government. If this party wins based on such a program, then we could have real government reform. But you are right that in the current political context this would not be feasible.

At 7:53 AM, Blogger Unknown said...

Tax cuts and small government!! sounds like a Republican :-)

At 7:56 AM, Blogger Unknown said...

By the way, how about social services or public medical insurance in the budget? Do you know what percentage these programs make of the total budget?

At 9:33 AM, Blogger Khalaf said...

Issam: Well, I am not necessarily advocating a Republican agenda. I would say that our ecomomic and social options should be framed in a coherent way so that people can choose. Now we are trying to balance two conflicing models. On the one hand, we want ecomomic liberalism, free enterprize and low taxes, and on the other hand we want socially friendly policies that attempt to expand government employment and services, subsidize basic commodities and so forth. It is no wonder that we are meeting with modest success on our economic and social policies, since we still haven't formulated our priorities. Personally, I think we can manage better with a smaller government workforce.

The Ministry of Health takes a good portion of the budget (I remember 200 million, but I should check). The National Aid fund has a more modest budget.

At 4:14 PM, Blogger Unknown said...

Well said Kalaf, I was teasing you.

At 7:32 PM, Anonymous Anonymous said...

i'm reha mohashed. i love you.


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