Zionist Camp Unveils Economic Plan Calling for Deeper Government Role

But, sounding a realistic note, Herzog and Livni note program wouldn’t be fully implemented until 2017.

Lior Dattel
Lior Dattel
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Isaac Herzog, Manuel Trachtenberg and Tzipi Livni.
Isaac Herzog, Manuel Trachtenberg and Tzipi Livni.Credit: Ilan Assayag
Lior Dattel
Lior Dattel

The Zionist Camp – the joint list of the Labor Party and Tzipi Livni’s Hatnuah – unveiled an ambitious plan on Tuesday to address problems ranging from soaring home prices and the high cost of living to shortfalls in education, welfare and health.

Party leaders offered the program as a sharp contrast to what they termed the failed economic policies of Prime Minister Benjamin Netanyahu, who they said had failed to improve the lives of the average Israeli in nearly six years in office.

“The Israeli public has been under socioeconomic attack for years,” Labor Chairman Isaac Herzog told a news conference in Tel Aviv. “In the Israel of 2015, buying a home is an impossible dream for young couples. The elderly rummage through garbage cans. We’re seeing the Israeli middle class ground down, wounded and crushed. There’s no horizon and no hope.”

Dubbed the Social Reform Program, the plan wouldn’t get fully under way until 2017 even if the Zionist Camp succeeds in forming a government after the March 17 Knesset election because some 7 billion shekels ($1.8 billion) would need to be found to fund it.

Nevertheless, party leaders said they would be able to scrape up close to half that amount already in the 2016 budget to partially fund the plan, Herzog said, by taking money that was to be set aside for the aborted zero-value added tax plan. The team tasked with developing the plan, which will be released in detail in the coming days, included a “realistic timetable.” Nevertheless, he promised, “People will begin feeling the change from the first year.”

“They sold us on trickle-down growth, but I get up every morning and look out the window to see whether the growth has trickled down – and it hasn’t,” said Manuel Trajtenberg, the Zionist Camp’s prospective finance minister and the head of the team that designed the plan. “That’s why we need to invest in the human capital of everyone.”

Trajtenberg said he saw peace with the Palestinians as a part of the Zionist Camp’s economic agenda. “We also need a diplomatic horizon,” he said.

The plan calls for the government’s budget deficit to remain at the same levels as of now, but allows for government spending to increase if the economy grows. It doesn’t require any tax increases “for the foreseeable future,” although it does count on the Tax Authority to step up collections and crack down on unreported income.

Trajtenberg promised that as finance minister he would increase government spending to 40% of gross domestic product, reversing a decline over the last three decades and bringing Israel up to the average of Organization for Economic Cooperation and Development countries. He didn’t relate the defense budget, which the committee he headed after the 2011 social justice protests had called to cut. He did say he supported the Brodet committee proposal that calls for defense spending to grow more slowly than the overall economy over the long term.

Concerning the controversy over natural gas prices, Trajtenberg said he supported competition but also believes the government had to impose price controls and accelerate construction of a pipeline network to delivery gas to industry all over the country. “Even if we encourage competition, it’s not enough to ensure that gas reaches the periphery. We need cheap gas to spur employment,” he said.

The program dealt more with middle-class concerns and less with those of the poor. It didn’t mention proposals to eliminate VAT for basic food products, but it did talk about more government spending for innovation and making investment grants available even to companies that don’t meet the current standard of exporting at least 25% of their output.

To solve Israel’s housing shortage, the Zionist Camp proposed building thousands of housing units under government ownership. The homes would be leased, with the tenants enjoying the right to buy them.

A Likud spokesman called the proposal “a rubber check.” “We’re talking about promises that will empty the public’s coffers. The left has no idea how to create growth and how to fill the coffers. These slogans will lead Israel into a crisis,” he said.

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