In a Facebook post last week, Minister of Finance Israel Katz compared President Biden’s recently unveiled infrastructure plan to his own infrastructure plan. However, the two plans are almost impossible to compare, since they are drastically different both in scope and targets.
President Biden’s infrastructure plan addresses the historic underinvestment in infrastructure, like Internet lines and highways, and proposes increased funding for non-carbon based energy sources. The plan will see 2 trillion dollars spent over the next 8 years, an investment equal to 14 percent of GDP.
ממשל ביידן מציב כרגע לאישור תוכנית מאתגרת נוספת להזנקת המשק האמריקאי בהיקף של 2.3 טריליון דולר להשקעה בתשתיות, וזאת לאחר…
Katz’s plan, on the other hand, totals at only 5 billion shekels. Together with the emergency COVID-19 plan, this reaches a total of 10 billion shekels, roughly 3 billion dollars. In terms of GDP, this amounts to only 0.7 percent of the GDP – 20 times smaller than the American plan.
As Katz pointed out, the U.S. suffers from vast underfunding of infrastructure projects, but Biden’s plan doesn’t stop at dealing with the neglect of the past. The aim of Biden’s plan is to reform some of the very basics of the American economy, putting a much greater emphasis on renewable energy and strengthening the economy for the decades to come.
This is the reason why, on top of investment in highways and bridges, Biden's plan also includes government subsidies for renewables, electric cars, public transport and more.
Katz’s vision, on the other hand, offers at most a return to Israel’s pre-pandemic economy. Apart from the plan representing very low ambitions, financial institutions in Israel claim that overcoming the financial and unemployment crisis is unlikely in the near future.
Katz has mentioned the “large sums” that the government has invested in aiding the unemployed to return to work. At most, Katz is referring to 1.3 billion shekels, less than a third of which has actually been spent up until now.
Biden’s plan allocates 100 billion dollars to the same programs, and aims at creating new, wel -paying jobs: an aspect that is completely lacking in the Israeli plan. The American plan aims not only at reducing unemployment, but at creating higher-paying jobs.
The biggest difference between Katz and Biden’s plans is in the worldviews they represent. Biden’s plan represents a new approach to the state’s role in the economy, pushing for a far more active one.
The state in Biden’s plan doesn’t replace the private sector, but it certainly takes a leading role in shaping social, environmental and economic issues. This is precisely the opposite of Katz’s plan, which includes deregulation and privatization, and sets no long term goals for the Israeli economy.