A Poor Budget

The ministers' battle over the state budget is now largely about honor, even though it perpetuates the status quo, and lacks innovation.

Having received cabinet approval this weekend, the state budget will now be fought over in the Knesset. The battle's opening shot was fired by Social Affairs Minister Isaac Herzog, who left the cabinet meeting in tears in a show of opposition to the harm he believes the budget will inflict on the poor. Shas chairman Eli Yishai followed soon after. Though his party abstained from the budget vote, Yishai has already vowed to fight to raise National Insurance payments and against plans to freeze the increase in child allowances.

The battle is now largely over honor - ahead of the budget meeting, the Finance Ministry's budget department had already decided to waive the two cutbacks Yishai's party opposes. Yisrael Beiteinu chief Avigdor Lieberman has jumped in the ring himself, convening a press conference yesterday to bemoan cuts in immigrant absorption and public security funding. In the end, however, he too will receive something, lest he fail to convince his party's MKs to vote for the budget.

Despite remarks to the contrary by Finance Minister Yuval Steinitz, the budget channels considerable sums from social services to the military. The fact is that cuts in social services will deepen from 2 to 3 percent over the next two years, money that will go toward a defense budget set to grow by several billion shekels.

How is it possible that the Finance Ministry is announcing a cut in defense spending while the military budget grows? The truth is that the budget merely makes a small dent in the annual funding increase sought by the Defense Ministry - it is by no means a real budget reduction. Even that small cutback is dubious, as experience shows that the defense budget will ultimately expand to 10 percent beyond the sum allotted by the cabinet and Knesset.

The current budget offers no macro plan for encouraging growth, but only recipes for increasing spending and the deficit, while violating earlier promises to lower taxes. The budget includes none of the reforms needed to spur growth or tackle the bureaucracy and delays in planning and building procedures.

It includes no plan to include core courses in the ultra-Orthodox education system, or to encourage Haredim or Arabs to join the workforce, and a new Wisconsin welfare-to-work program was not inserted into the Economic Arrangements Law despite promises to that end. In short, it does virtually nothing to address the fundamental problems of Israel's economy.

The conclusion is clear. Perpetuating the status quo, lacking innovation and the means to promote growth, it is, quite simply, a poor budget.