It Could Have Been Worse

The cabinet approved an across-the-board budget cut yesterday amid vociferous objections. Labor faction chairman MK Yoram Marciano, for instance, claimed that this act violated the coalition agreement. And Defense Minister Amir Peretz charged that the cut's sole purpose was to hurt him: "You've created a situation in which the cuts are me, the handouts are you," he said, referring to Prime Minister Ehud Olmert and Finance Minister Abraham Hirchson.

The NIS 870 million cut is relatively small and surprised no one. But with Labor's leadership primary approaching, no one will miss an opportunity to reap political capital.

Just two weeks ago, Peretz demanded an NIS 3.5 billion addition to the defense budget. Olmert agreed to NIS 1.9 billion, and everyone knew that this would have to be financed by corresponding cuts.

But Peretz, as usual, tried to be an alchemist. "The need for tanks must not be set against the needs of the elderly, or the need for airplanes against the needs of children," he declared. That is good demagoguery, but in real life, every housewife knows that there are budgetary limitations, and every politician knows that if you bust the budget, you will no longer have low interest rates, rapid growth and falling unemployment.

Hirchson convened coalition leaders last week to remind them that the increase in defense spending would necessitate a 2.5 percent cut in other ministry budgets. Why did this cut later rise to 3.5 percent? Because a deal was signed with Yisrael Beiteinu to increase benefits for demobilized soldiers by NIS 150 million, while the Knesset refused to cancel other grants for demobilized soldiers (NIS 45 million). To finance this, the amount slashed had to be increased to 3.5 percent.

Had the defense budget actually increased by the full NIS 1.9 billion, an even higher cut would have been necessary. However, the treasury found some funds within the defense budget itself: The budget for building the separation fence was cut by NIS 500 billion; NIS 500 billion were carried over from the 2006 budget; and freezing a plan to shorten compulsory military service saved NIS 250 million. Thus only NIS 675 million was needed to be transferred from other ministries to defense.

Peretz is the last person who can protest these cuts. Had he agreed to postpone the defense hike until April, when the Brodet Committee will publish its recommendations on defense spending, or accepted the treasury's plan to streamline defense outlays, the cut could have been reduced to NIS 200 million.

Peretz and Marciano know the truth: that the demand for higher defense spending necessitated the cuts in social spending. So what do you do when the facts are against you? Raise your voice. And hope the public will be confused.