"If I'd have known, I would have postponed the authorization by a week or two since we had no intention of provoking anyone," Yishai said. "It is definitely unpleasant that this happened during Biden's visit."
In other words, we should have waited two weeks before telling the White House to buzz off.
According to the Ministry of Foreign Affairs the Prime Minister was displeased at the timing of the announcement by Interior Minister Eli Yishai of Israel's intention to move forward with construction in East Jerusalem. Perhaps. Israeli politicians have grown accustomed to telling the U.S. to buzz off and getting away with it, so Netanyahu was unprepared for the tone of Biden's strong condemnation. Biden has also been intent to continue to drive the point home, and not just by letting the soup cool for 90 minutes: “As we move forward, the United States will hold both sides accountable for any statements or actions that inflame tensions or prejudice the outcome of talks, as this decision did”.
One needs to be very dubious of Netanyahu's commitment to a two-state solution, even if the U.S. continues to press. However, if the U.S. does not press, this venture is going nowhere.
For excellent reportage on recent developments see this from the Economist. The report includes the following:
"...Mr Netanyahu apparently wrung an assurance from the Americans (before Mr Biden’s embarrassment) that concessions offered by his predecessor, Ehud Olmert, to the Palestinians’ president, Mahmoud Abbas, would not mark the point of departure for new negotiations. Instead, the parties will go back to the long-dormant “road map” laid out by George Bush seven years ago. Israel, then led by Ariel Sharon, broadly accepted it but with a long list of reservations."
If true, then Biden's words are only bravado.