Israeli Finance Minister Yigael Hurwitz presented the Cabinet Sunday with an austerity budget that could set off a new crisis for the coalition government, Cabinet sources said. Israel's annual inflation rate is 138 percent, and economists predict that unless there is a tough budget, including big spending cuts, it could top 200 percent next year. Mr. Hurwitz proposed substantial cuts in defense spending, which normally takes up a third of the budget. He also advocated slashing public welfare programs, tightening foreign-currency control regulations, and imposing import controls. Sources said if his budget were not adopted he would resign, break away from the ruling Likud Party, and run as an independent in the next elections. He has threatened to resign before but has always backed down.