Relations between Shraga Brosh and Roni Bar-On could not be worse. Last week the president of the Manufacturers Association and the finance minister attempted to talk, but the conversation ended with a mutual slamming down of the phone. And all that happened before Brosh publicized his plan to establish a new national economic-social council, a proposal that really blew Bar-On's top.
The council is not a new idea. Every few years industrialists raise the idea of establishing an economic-social council, which will participate in the treasury and cabinet's economic decision-making process. Up until now it was a waste of everyone's time. Business leaders and the Histadrut labor federation would show up for a well-publicized meeting with the prime minister and lay out their ideas for encouraging and subsidizing industry and wages. The prime minister would listen attentively and even write down a long list of items in his little notebook, as Ariel Sharon was wont to do, but nothing ever came of it. Only the media would report on an important meeting.
This time was different. Brosh and Ofer Eini, the Histadrut chairman, are drunk on the power they have accumulated over the past two years - and they want much more. They want an economic-social council anchored in law, and for its decisions to be legally binding. The new council will decide on macroeconomic goals, social goals, tax rates and wage increases - and the state budget will be derived from these decisions. Brosh and Eini will have the right of veto, just like the prime minister. Together they will be the three sides of an "equilateral triangle."
If all this comes about, it will be the end of democracy, since who needs parties and elections if interested parties, who have never been elected by the broader public, decide how to allocate their tax money. And if this is the right direction, why shouldn't Eli Moyal, the mayor of Sderot, be the one to make decisions about security in the region near Gaza? And why shouldn't Chief Rabbi Yona Metzger, rather than the Knesset, decide on the laws of selling chametz during Passover?
But this is not only a matter of principle concerning the ruin of democratic government; it is also a practical matter of the destruction of the Israeli economy. It seems Brosh and Eini have made a strategic covenant to support one another in every demand and every plan; because there is an eternal sucker who always pays the bill: the treasury.
The two will profit both from the benefits to their own constituencies and the publicity they will receive, which will turn the two of them into central figures to whom everyone will make a pilgrimage. Brosh will always be ready to enthusiastically support Eini's wage demands - in the public sector - and will object to any reforms, whether in the ports or the Israel Electric Corporation, the basis of Eini's power. And Eini for his part will provide Brosh with quiet in the private industrial sector, where the Histadrut has signed rather easy-going wage deals without strikes or labor sanctions.
Now Brosh and Eini have a practical mission. They want to prevent, via the economic-social council, the expected budget cuts. They know there is a small deviation in the 2008 budget, and a huge one in 2009 in all areas. But they do not want cutbacks. They want to expand the budget, which would be grossly irresponsible as well as completely ignorant of macroeconomics.
The two want to increase subsidies to industry, and exports and wages in a large and varied number of ways - while at the same time lowering income taxes, VAT and corporate taxes. These are "growth-building steps" according to Brosh and Eini. But the truth is they are "disaster-building steps" for the Israeli economy.
Because if there is one thing that is still barely maintaining economic stability and growth, it is budgetary responsibility, which Bar-On is hanging onto by his teeth. If that disappears, the economy will be hit by a financial storm, lowered ratings, rising interest rates, lower growth and higher unemployment. And the public will not complain about Brosh and Eini, but about Bar-On and Ehud Olmert.
It is not only Brosh and Eini who are behind the bewildering idea to establish the council. Ra'anan Dinur, the director general of the Prime Minister's Office, and Manuel Trajtenberg, the head of the National Economic Council, are also supporters. They want to put the treasury in its place and limit its authority, by transferring the power to themselves.
Establishing the economic-social council is a certain recipe for paralysis when difficult decisions need to be made. But even if Brosh and Eini have veto power, it will be impossible to make essential budget cuts and implement the necessary reforms in the air and sea ports, in water and sewage systems, in communications, the electric corporation, and the Lands Administration - and the economy will fall into dangerous stagnation.
All alone in the fight against Brosh and Eini is the finance minister. His stand is important and brave. Bar-On knows that establishment of the council would be a danger to democracy and the economy. We can only hope that this time he will teach Brosh and Eini that the treasury is not the eternal sucker.
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