Charge on the defense budget
We were a tad hasty with TheMarker's headline last week - "Defense budget is toast, political rivals agree".
The cow is a sacred one, and it's a fat one, too. As the elections loom, the big parties are indeed willing to publicly discuss cutting back the defense budget, which symbolizes the change in the way society views the defense system.
The mere fact that the public is willing to debate the defense budget is an achievement. For years the social and economic debate completely ignored the tremendous burden posed by the defense establishment.
But there's many a slip 'tween the sacred cow and the slaughterhouse. Or even cutting one little hair from its tail.
Talk about cutting the defense budget sounds good in today's mood of helping the poor. Having noticed that the people are starting to get suspicious about their sloganeering, the parties can suggest routing money from defense to "social" budgets.
But declarations that they'd slash one, two or even NIS 4.5 billion from defense lip service. Go through the archives of any of the newspapers and you'll find reports, year in and year out, that a billion or two were cut from, yes, the defense budget. Yet in practice, the 2006 budget allocates NIS 46 billion for defense, which is the highest amount ever, even though the American conquest of Iraq has changed the map of threats against Israel beyond recognition.
What would you like with your tank, sir?
What Israel needs is a long-term program to reduce defense spending by 20% or 30%. The cut should be based on conceptual changes.
Like education and health, the army supplies a service to the public. A service bears a certain cost that must be prioritized in the list of all costs.
The best way to ignite real debate on defense spending is to start with the figures. Here are some figures we know and others we'd like to know.
* We know: From the start of the 1990s to date, Israel's actuarial liability to pensions for career soldiers shot up for NIS 20 billion to NIS 100 billion. Within a few years the annual outlay on retirement stipends to ex-soldiers will reach NIS 10 billion. Ten billion is a huge amount and will come at the expense of government spending on education, health and welfare.
We would like to know:
* The real cost of all the top earners in the Israeli army, including pension provisions and social benefits. Hundreds or thousands of army personnel have been assured of retirement schemes costing more than $1 million.
* The real wage cost of all the soldiers with civilian professions in the Israeli army - such as doctors, clerks, economists, psychologists and technicians. Are they really earning anywhere from 20% to 100% more than their civilian peers? Why?
* How many clerks / administrators / drivers / aides and other support personnel the Defense Ministry and army offices have relative to the number of managers. How does the ratio relate to civilian organizations?
* The breakdown of wages for army officers. What perks and benefits do they really get? How many years of higher education are they given and what does their education cost? What tax arrangement applies to their perks and benefits, compared with parallel levies in the civilian world?
* What are the budgets for the main armaments development projects? How much is budgeted for arms procurement? For instance, how many billions has developing the Merkava tank cost? What is the annual Merkava development budget?
* How many external advisers does the broader security establishment employ? How much do they cost each year? How has their cost developed over time? How many are former army officers forced into retirement by cutbacks, only to be re-hired as advisers?
* What is the real cost of the army's enormous procurement delegations outside Israel? Are they needed at all? Have these delegations been scaled back in recent years as communications and other technology advances?
The black box
No, that is NOT the end of our questions. We have a lot more. Everybody does. The defense budget is an opaque black box from which no information escapes.
The key man for the answers is the budget director at the Finance Ministry, Kobi Haber. He used to be in charge of the director-general at the ministry.
The problem with Haber, and with all the treasury officials through all time, is that he's been trained well by the military. His expectations of true disclosure from the army, and efficiency, are vanishingly low. He, like his predecessors, like the finance ministers through the ages, knows that none of them have ever achieved true budget cuts of defense spending. Because when the crunch comes, the prime ministers will always rule on the side of the army.
Revolution of the civilians
Two years ago, a window of opportunity opened, offering a glimpse of the defense budget, and an opportunity to hack at it, too. The economy was shuddering in fear of financial meltdown and painful budget cuts had to be made. The Americans had just rolled over Baghdad. But the Finance Ministry people missed the window: it was much easier to cut budgets supporting the aged.
Now another window of opportunity has opened. For the first time in the history of Israel, the three leaders of the three major parties are not ex-generals. Ehud Olmert, Benjamin Netanyahu and Amir Peretz are civilians with civilian outlooks.
The debate on restructuring the defense system should be led by civilians. And the debate should be conducted using economic terms.
The keynote speakers in the debate should clarify, in advance, the difference between cutting "defense" and cutting "defense budgets".
They must not cringe before the generals' usual scare tactics, of which we are all sick to our stomachs.
The treasury and budget department officials prefer to talk about "positive" issues, such as budgets for investment and trains. But Kobi Haber and Israel's next finance minister have a task of historic dimensions before them: to expose the secret figures to the glare of sunlight. No, they don't have to expose top secret military information, just dry economic facts. When the figures are out, the government will have tremendous public support for the greatest social reform Israel has ever known.
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