Why did Israel snub the Vice President of the United States?

Haaretz asks:

Why would Israeli officials degrade Israel by humiliating the vice-president of the United States?  What conceivable advantage is there in the Interior Ministry choosing the occasion of a high-profile visit by Joseph R. Biden, Jr., a mission aimed at soothing strained relations between Israel and the Obama administration, to announce the approval of 1,600 new homes for Israelis in East Jerusalem?

Good question.  US economic assistance to Israel since 1949 has totaled $101 billion.   Israel has received one quarter of that amount in the past decade.   Why would any country gratuitously disrespect such a  benefactor?   The newspaper offers this explanation:

The profit, for the hard right, is political. It mines an emotional vein along a relatively small but potent segment of the Israeli electorate, which holds that to insult Israel's indispensible ally is to assert the Jewish state's independence.

In their drive to expunge any trace of hitrapsut - groveling to the colonial master. . . .

On the whole, the farther right one goes in Israel, the more pronounced the sentiment. Avowedly pro-Kahane extremists, now strong enough to have placed their own representative in the Knesset, have gained shock cred by lining highway underpasses with posters of the "Jew-hater Obama" photoshopped into wearing a Palestinian kaffieh.

Harder to fathom was the Defense Ministry's Monday announcement that work would resume on 112 homes in the ultra-Orthodox settlement of Beitar Illit, units whose construction had been suspended under a White House-spurred settlement freeze.

Chalk it up, if you like, to the powerful pro-settler presence in certain strata of Israel's bureaucracy. Or credit the mercurial, not to say, erratic, policy style of Defense Minister and Labor Party Chairman Ehud Barak. Or accept the official explanation that the timing of the decision was coincidence, entirely unconnected with the vice-presidential visit.

In the anarchic swirl of current Israeli governance, the correct answer may well be: all three.

If that's the correct answer, what's the correct response?