When Prime Minister Benjamin Netanyahu declares at a cabinet meeting that the media exaggerated in describing the grave crisis with the United States and throws in a few more phrases from the "it'll all be fine" department, it is clear that he has neither learned nor forgotten anything. You didn't have to read Thomas Friedman's devastating column in The New York Times to know that there is a limit to the Americans' patience and their willingness to let us pour mud on their heads and call it rain.

If Bibi genuinely did not know, as he foolishly claims, that 1,600 more homes were being planned for East Jerusalem, he does not deserve to be prime minister. If he did know, and permitted Interior Minister Eli Yishai to announce the plan exactly during the visit of Joe Biden, who is both U.S. vice president and a friend to Israel, then there are two possibilities, each worse than the other: either stupidity or fear of the extremists in his cabinet. Either way, he is playing with fire.

It's not just the personal insult to Biden, our only friend in the White House today. It's the insult to the institution of the presidency, which no American can forgive. The presidency is sacrosanct in American democracy, and when Bibi rolls his eyes and says the incident should not have occurred and that in any event it happened in good faith and "we know how to handle such situations and shall do so calmly and responsibly," he reminds me of the guy in the joke who is looking for the "eye and ear" doctor. No such thing, he is told. "What's your problem?" And he replies, "What I hear is not what I see."

Ehud Olmert, Tzipi Livni and Ehud Barak sought to close a deal with the Palestinians. But Bibi's government, trapped between Shas and Yisrael Beiteinu, is trying to sweep everything that has been achieved and all the expectations of the current government under the rug. Bibi cannot begin to grasp the damage he is causing to U.S.-Israeli relations with the whole settlements issue. My guess is that he tried in vain to phone President Barack Obama. Instead he got Secretary of State Hillary Clinton, who told him off in no uncertain terms. It was the first time that the settlements were linked to the future of bilateral relations.

Clinton did not use diplomatic language when she accused Bibi of undermining "trust and confidence in the peace process and in America's interests" by announcing plans to build 1,600 homes just as we came to start proximity talks with the Palestinians. The fury radiating from the White House is so great that were someone to introduce an anti-Israeli resolution in the UN Security Council the United States would join in.

Biden could have forgone his dinner with Bibi and Sara and returned home immediately. But it was important to him to rescue us from ourselves, emphasizing in his speech at Tel Aviv University that we are damaging our relations with Washington just as it is pressuring Iran to change its policies. That is, there is a connection between sanctions on Iran and the peace process with the Palestinians.

Livni was right when she attacked Bibi on Sunday for placing our national security in Yishai's hands. In retrospect it is clear how right she was to refuse to partner with Yishai in order to become prime minister without elections. America "hand" Zvi Rafiah, a great believer in America's feelings of friendship for Israel, said: "For more than 30 years I have not heard so harsh an American rebuke, and for the first time I fear for the future of our relations with the United States."

The cabinet violated two principles, that of not surprising America and of not calling our credibility into question. Had Bibi apologized immediately for Yishai's lapse and promised not to undertake any construction unilaterally, it might have been possible to weather the incident. But by attempting to do damage control and by running off to tell "the gang" that everything is fine, he further enraged the president, who has not scored many successes and who does not really like us.

Bibi's casual attitude toward his scandalous conduct calls into question his fitness to continue serving as prime minister. "When we surprise the U.S. administration we erode the confidence in the cabinet's commitment to a two-state solution," U.S. affairs expert Dan Halperin said.

Bibi has indeed remained the same old Bibi, who does not even fit the old saying that the clever man is someone who can extricate himself from a situation that the wise man would not have got himself into in the first place.