Elections in Winter if Coalition Doesn't Support Budget, Say Knesset Sources

Netanyahu will still attempt to secure passage of 2013 budget if he thinks he has a majority.

Chances are growing that Knesset elections will be moved up to February or March from their scheduled October 2013 date, owing to the lack of broad support in Prime Minister Benjamin Netanyahu's coalition for the government's proposed budget, Knesset sources say.

Before the Rosh Hashanah holiday, budget discussions were held among the coalition parties, but at this point no agreement to support the budget has been secured from Yisrael Beiteinu or Shas. In addition, Knesset Finance Committee chairman Moshe Gafni (United Torah Judaism ) expressed the view last week that it would be difficult to garner majority support for the budget proposals.

Netanyahu recently held discussions with Foreign Minister Avidgor Lieberman, who heads Yisrael Beiteinu, Defense Minister Ehud Barak, who is at the helm at the Atzmaut party, and Interior Minister Eli Yishai, who leads the Shas faction, seeking their support for his budget proposal.

The prime minister said at the time that after Rosh Hashanah, he would submit the budget for Knesset consideration only if it is clear to him that he would have majority support.

If he manages to garner such support, he is still expected to push for parliamentary approval for the budget. Lieberman recently said he does not favor moving the elections up, but officials in the party have sought additional details regarding the proposed budget and planned government spending cuts. For his part, Yishai announced last week that his party would oppose cuts to government child allowances and income supplement payments.

By law, a budget bill is supposed to be submitted to the Knesset by the end of October, but on Thursday of next week Netanyahu is due to leave for a trip to the United States, presumably deflecting his attention to foreign policy matters rather than the 2013 budget. For his part, Bank of Israel Governor Stanley Fischer told TheMarker in an interview just prior to the Rosh Hashanah holiday that if the budget is not to be submitted on time, the country should head to elections in order to dispel the budgetary uncertainty.

Meretz challenges budget 'ideology'

In another budget-related development, Zahava Gal-On, leader of the opposition Meretz party, has submitted a bill that would scrap the current formula linking government outlays to the country's gross domestic product. In explanatory notes accompanying the bill, it is stated that rather than setting a limit to state spending related to GDP, the legislation would set a ceiling on state spending that would be maintained through a system of progressive taxation.

The current system, Gal-On said, leads to a "continued erosion of the public sector and social services" by requiring government spending cuts to maintain spending at a specific percentage of GDP. "The size of public expenditures is not an economic issue," Gal-On said, "but rather an ideological issue, reflecting priorities and deciding the socioeconomic character of the country.

"Studies show that the larger public expenditures are, as a percentage of the [gross domestic] product, social disparities and inequality decline," she argued. "Under the current circumstances, even if revenues from taxes would grow, the scope of public expenditure would not increase, which means there would be a continued erosion of public services such as education, health and welfare."

The Meretz leader accused Netanyahu and Finance Minister Yuval Steinitz of using the current formula for spending limits to try to impose what she called a "hyper-capitalist" way of life on the citizens of the country, and accused the two of pursuing the policy for ideological reasons but presenting it as an economic necessity. "There is no problem," she claimed, "in maintaining a low debt-to-GDP ratio by limiting the deficit and increasing tax collection."