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The senior treasury officials have a problem; they are aware that the new acting minister, Ehud Olmert, wants to distinguish himself from his predecessor, Benjamin Netanyahu, and that they will soon have to submit a list of proposals to wage war on poverty, boost employment and close the income gaps.

Their mission now is to satisfy their boss while not destroying the economic achievements of recent years. Therefore, they naturally seek revenue sources, and defense is the budget item that is most accessible for goring drastically without harming the poor or growth.

Every year, we witness a battle of the titans over the amount of defense spending, which ends with the finance minister happily announcing that he has managed to trim this by a few hundred million. But this week's state comptroller's report shows that even the treasury has been pulling a fast one on us.

The budget set at the beginning of the year is just a working basis. Even beforehand, when it's being signed, there is an understanding between the treasury and the defense establishment that the budget will increase during the year, and therefore the army can use as it likes the proceeds from selling old equipment overseas. In addition, the prime minister agrees with the defense minister to transfer additional funds to the Israel Defense Forces as the year progresses, above the set sum at the start.

And that's what happened this year. The treasury wanted a cut of NIS 1.5 billion, but Prime Minister Ariel Sharon agreed to a cut of only NIS 650 million (wink, wink, because the "cut" will see its way back into the spending during the year).

In 2001, defense spending was set at NIS 37 billion, but in the end it reached NIS 42.5 billion. In 2003, NIS 41.1 billion was agreed on, and this hit NIS 45.6 billion. In 2004, NIS 41.9 billion was the limit, but eventually the defense establishment spent a total NIS 46.2 billion.

There is clearly some misleading going on, even law breaking, because the Knesset and the ministers know nothing about these wink-wink prearrangements when they vote on the state budget; they are not even aware they must cut spending on welfare in order to finance these vast additional expenditures.

Recent years have demonstrated the absurd adage that Israel is an army with a state, and not vice versa. All spending on social affairs - education, health, infrastructure, income support, child allowances, state pensions - has been sharply reduced, and only defense spending has grown.

Every year the army would whip out a new threat - two years ago, it was Saddam Hussein; a year ago, it was the Shihab-3 missiles. Now Hussein has gone, relations with Jordan and Egypt are good, Syria has been forced to withdraw from Lebanon, the Syrian army grows rusty, George Bush threatens Syria, the U.S. sits in the heart of the Arab world and keeps a wary eye on Iran's atomic program, Lybia withdraws from its nuclear weapons plans - and there's no chance of an anti-Israel Arab coalition. In addition, the front lines have shortened following our withdrawal from Gaza, all of which affords the IDF an enormous saving.

In other words, here's a wonderful opportunity for some sharp cuts at defense - in buildings, projects, the number of career soldiers, cars, service conditions, in logistics and personnel. We could even cut out the crazy lifestyles of the head honchos in the Defense Ministry, parading as "scientists" earning NIS 45,000 a month, and all the bloated defense delegations in New York and security details spread all over the world.

Which leaves us only to turn to Defense Minister Shaul Mofaz - who surprisingly has spoken out against the "poverty and the [income] gaps that are destroying society" - and tell him that here's the golden opportunity to turn his words into action and to take a billion or two from defense and spend it on fighting poverty.

And when will that happen? When Sharon embraces Netanyahu.