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Where has Amir Peretz gone?

Remember him? The guy with the mustache? Peretz, the chairman of the Histadrut? The bristling labor leader who skipped from dais to TV studio, until a month ago, declaring himself the last barrier protecting the little man against the hard-hearted capitalist finance minister, Benjamin Netanyahu?

Peretz did his bit, telling of his father's pension and describing the misery of the Off Kor chicken slaughter-house workers. But ultimately he capitulated to the treasury on most of the issues important to the poor, including cuts to their allowances from the government, and on the retirement age.

His biggest feat was not for the public he purports to serve, but for the public he really serves - the highest-paid employees of the public sector. Their salaries were cut by half of the treasury's original intention. And the wage cuts end after only two years, instead of being permanent.

The person who put Peretz's achievements, as protector of the people, into proportion was of course Vicki Knafo, the single parent who did nothing more than march to Jerusalem, on foot, and demand to meet with the finance minister personally.

Knafo succeeded where Peretz failed. She managed to show that there are people behind the treasury's figures. She managed to remind the public that the pool of misery in Israel is expanding. She managed to put the price society is paying, for the treasury's decision to wean people off government allowances, on the agenda.

But judging by the development of the public debate on the Knafo story, her battle may not lead to the real debate so sorely needed on social policy in Israel.

In recent days the debate on Knafo has focused mainly on that of single mothers. Are they unfortunates on which the treasury is bearing down? Or is it a group who government policy induced not to work, and live at the expense of the taxpayer?

But that isn't the real point.

Obviously, among a group as diverse as single mothers, you have ones who are unfortunate and ones who are indolent. Secondly, single mothers are just one of the many groups whose situations have dramatically worsened by the destructive economic processes of recent years. There are people just as miserable among regular two-parent families earning peanuts and barely surviving, among retirees, among the disabled, and in fact among all the people crowding the National Insurance Institute.

The Vicki Knafo affair should engender a deep, searching debate on how the State of Israel reached this situation, with so many people needing handouts. People should be discussing how macroeconomic policy was so bad for so many years that the economy can no longer support a decent standard of living for hundreds of thousands of people.

Such a debate would inevitably lead to harsh conclusions, such as evicting foreign workers, slashing allowances, and abolishing incentives that are counter productive to employment. Yet first and foremost, the Knafo affair it should lead to debate of where the cuts should start.

Vicki Knafo will have done us all a service if a true debate opens on all those pork barrels in the public sector, a debate on why the government hurried to cut allowances to the poor while allowing thousands of public servants to make enormous salaries.

Vicki Knafo will have done us all a service if she sparks a broad public debate on the economic cost of the vast settlement juggernaut in the territories - how much it is costing us, directly and indirectly, to retain these territories.

Vicki Knafo will have done us all a service if it triggers a demand to slaughter the overstuffed sacred cows of the public sector, such as the defense budget.

Because the real story isn't Vicki Knafo, it isn't single mothers or parents or even state allowances, it's the priorities of the government in Israel, the way resources are distributed, and priorities.

Benjamin Netanyahu has started to touch on these sore points. He has shown willingness to cut at sensitive issues, such as allowances. But that's just the tip of the iceberg, of only one issue. The question is whether Netanyahu will, or can, open the entire budget for rethinking, as he did the subject of allowances.