It's the Budget, Stupid

It has now become clear just how wrong was the claim that Haredim decide how many children to have solely based on religious law and social pressure, disregarding economic limitations.

It has now become clear just how wrong people were who for years claimed that the ultra-Orthodox are a special group to whom the laws of economics do not apply. The claim was that the Haredim decide how many children to have solely based on religious law and social pressure, disregarding economic limitations. Therefore, the argument went, it makes no difference whether the government increases or decreases child allowances - Haredi families will continue to grow. This approach also contained a touch of arrogance: It implied that the Haredim do not care whether their families live in poverty or economic comfort.

The other approach (which I advocated) held that when you increase child allowances (from the fourth or fifth child onward), that encourages Haredim to have larger families. When you cut the allowances sharply, as was done in 2003, the result will be smaller families. I also predicted that the change would take time: It would happen only once the public was convinced that the cuts would not be rescinded under pressure from the Haredi parties. Therefore, it would take a few years until evidence emerged of a change in behavior.

In the Muslim sector, the change was obvious. Statistics have already been published about the decline in fertility rates among Muslim women as a result of the reduced allowances - from 4.7 children per woman in 2000 to four in 2006, with most of the drop occurring after 2003. The statistics showed an even sharper drop in fertility rates among Arabs in the south (namely, the Bedouin): from nine children per woman in 2003 to 7.6 in 2005.

However, there was no data about the Haredi sector, because national statistics do not distinguish between Haredi, national religious and secular Jews. Only this week did the first statistics become available: Haaretz reporter Shahar Ilan revealed that in the Haredi city of Beitar Ilit, fertility rates dropped from 8.9 children per woman in 2001 to 7.7 in 2006 - a significant 13.5 percent decline. During those years, fertility rates in Modi'in Ilit dropped from nine children per woman to eight - a decline of 11.1 percent. Statistics on natural growth in newer Haredi cities, which are mainly populated by young couples, indicate a similar trend.

Until 1975, there were no child allowances. Instead, there were income tax credits. To reap "economic benefit" from a child, you had to get a job and earn a salary; then, you would pay less tax. In 1975, however, the situation changed. The Ben-Shahar Committee decided that instead of tax credits, families should receive child allowances, which would be paid regardless of whether the parents worked.

The Haredim saw that it was good and began to press for bigger allowances - from the fifth child onward. Successive Israeli governments caved in, and the allowances kept on increasing, finally hitting their peak in January 2001, when MK Shmuel Halpert of United Torah Judaism, backed by Shas, Likud and the Arab parties, passed a law raising the per-child allowance to NIS 855 a month from the fifth child onward, while the payment for the first child was slashed to a mere NIS 171 a month.

When I asked Likud MK Reuven Rivlin at the time how he dared to vote for such an anti-Zionist and antisocial law, he responded: "Without the Haredim, we have no government. It's a bad law, but I want to be in power ... I also know that a significant portion of the money will go to those Arabs who want to overpower us through demography, but I want to be in power." And indeed, Labor's Ehud Barak lost power to Likud's Ariel Sharon that year. Only when Shas went into the opposition and Shinui entered the government was then finance minister Benjamin Netanyahu able (in 2003, during Sharon's second government) to effect a revolution in the child allowances: equalizing them and making them much smaller. Halpert sought to bless his public and ended up cursing them.

Even today, most Haredim want large families. But growing numbers of them are having only four or five children, and the interval between each birth is widening. "There is more awareness of the difficulty," said a resident of Beitar Ilit. "A woman who says that she is tired, that's legitimate. They don't push her. It's clear that the economic factor plays a role."