Along with all the weightier questions being asked about the surprise new election we are facing, figures have been tossed around about the financial cost of holding a second election within six months. Most of them have little connection to reality.
As business owners know, there is a difference between cost, direct or indirect and "loss of income." The direct cost of a new election includes the major expenditures, which come from the state coffers: funding for parties and a budget for the Central Elections Committee. There are also other costs that stem from the government keeping appointees on the payroll who cannot do their jobs, or have no new work to do.
The direct cost is some 800 million shekels ($220 million), but the indirect costs are harder to estimate. Even the loss of income can be divided into two categories: the loss of a day off for government workers, and the loss to the economy as a whole. The government pays its workers for the day off, including special bonuses for those employees who cannot be released for election day.
But the country also loses because the private sector is shut down and a day of tax revenue goes up in smoke. Israel's daily gross domestic product stands at some 5 billion shekels ($1.4 billion). Clearly, election day does not comprise a loss of 5 billion shekels to the state budget, but conservative estimates indicate that the country loses some 1.5 billion shekels ($410 million) – some say it is even more. So we can assess the cost of an election at 2.5-3 billion shekels ($680 million-$830 million), approximately 1 billion ($300 million) of which comes directly out of the government's pocket.
Does the government have that money on hand?
The question is almost irrelevant. Just like the government found ways to fund the wars it was compelled to fight, it will have to change its priorities to find the money to carry out the democratic process, which it is obligated to do under law.
Where will the money come from?
Obviously, the Treasury did not plan for two elections in a single year. The Treasury has already said that the expenditure will require widespread cuts to government ministries. This is an immediate solution that the government will apparently have to accept before turning to other methods, like tax hikes, which would require a cabinet decision to be enacted.
Do we benefit from a new election?
It's possible. In the meantime, the transitional government cannot increase its spending, so the growing deficit could be checked. Many people in the manufacturing sector are happy to have a break from legislation they feel is weighing them down. In the U.S., the federal government was totally shut down before the last budget resolution, and it did not cause any exceptional damage to the economy or the money markets. But obviously, if a government is not assembled in a timely manner this time, it will indicate instability and could adversely affect the economy.
