The Finance Ministry, under Abraham Hirchson's leadership and with Prime Minister Ehud Olmert's support, has sent the bill for the coalition deals. This bill ? for changes in the state budget due to coalition bargaining ? totals than NIS 5 billion.
Since the total budget cannot grow ? it is limited by a set spending ceiling ? the extras that some of the ministries got in the coalition deals necessitate cutbacks at other ministries. And here is the big news Olmert and Hirchson proclaimed yesterday: The cutbacks are happening, but this time they are not egalitarian across all the government budgets. This time there are ministries that will not feel the pinch and may even get more money ? welfare, education and health ? and there are ministries that will feel more than just the pinch. Well, essentially there is one ministry: Defense will take the substantial NIS 1.7 billion hit.
This is even more substantial in light of the fact that the cut is landing on the Defense Ministry in the middle of the year, after the ministry has already spent part of its budget. This means that if the budget cut is approved, the pressure on the defense establishment in the second half of 2006 will be much heavier in order to meet its shrunken budget framework.
And with that, Hirchson and Olmert signaled that now, for the first time, they are trying to change budget priorities: take from the defense to give to society. This is an important signal, especially if it survives the hurdles that ministry is likely to try to create.
The social minister, Amir Peretz, predictably changed his tune the moment he sat down in the defense minister's chair, and he announced he would oppose any proposed cuts to defense spending ? in contradiction of his declared stance during the election campaign. If Peretz sticks to his guns, and the defense establishment answers the call to arms to torpedo the cutbacks ? as it has torpedoed proposed cuts time and time again ? ratifying the proposed cutback is far from a done deal. This will be Hirchson and Olmert's first test of leadership.
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