Israel's social reform is Netanyahu's test as leader
Everything depends on the prime minister. Benjamin Netanyahu must withstand all the pressures and get the Trajtenberg recommendations passed in the cabinet and in the Knesset. This will be his test.
The Trajtenberg Committee, which published its conclusions yesterday, managed to achieve the impossible. It kept its promises and issued a lengthy and impressive report that deals with many issues, within a mere 50 business days.
This is a serious report that on the one hand does not give in to populism, yet recommends making major economic and social reforms on the other.
The first important issue Trajtenberg decided on pertains to the budget and the size of the deficit. Despite heavy pressure both from within and outside the committee, the budget was not breached and the deficit was not increased.
It is hard to overestimate the importance of this decision in view of the crises in Europe and the United States, where they did overspend and increase the public debt. The result has been recession, unemployment and brutal cutback plans now being set into motion. We are fortunate not to have ended up in such a predicament.
The committee also succeeded in convincing the prime minister of the need to slash the defense budget in order to have money to transfer to education and employment. Indeed, the committee recommends legislation for free compulsory education for toddlers, a long school day, and placing a ceiling on the cost of private day-care centers. These are steps in the right direction that will also make it easier for young couples to go to work.
In the field of taxation, the committee decided to raise the direct tax on high-income earners and companies. The money this will provide will be used for tax-credit points for working fathers, increasing negative income-tax supplements, and reducing customs on imported goods such as industrial and electronic products and processed agricultural goods. This is an important step that will promote competition and reduce the cost of living.
Changes will also be made in import bans, which today jack up the prices of all products - again, in order to facilitate competition.
It is clear therefore that the committee's recommendations will encounter strong objections from numerous directions. The manufacturers will fight them, as will the farmers, labor federation and trade unions. So everything depends on the prime minister. Benjamin Netanyahu must withstand all the pressures and get the Trajtenberg recommendations passed in the cabinet and in the Knesset. This will be his test.