Ministers Grudgingly Approve Budget Cuts to Boost Health and Defense Coffers

The cabinet yesterday approved a cut in most ministries' budgets to finance an increase in defense and health spending.

The motion passed 24-6. All four Shas ministers voted against, as did Vice Prime Minister Silvan Shalom (Likud) and Science and Technology Minister Daniel Hershkowitz (Habayit Hayehudi).

The decision will add NIS 1.5 billion to the defense budget in 2009-10 and NIS 425 million to the health budget - the latter mainly to pay for swine flu vaccine. To finance these additions, most other ministry budgets will be cut by 2 percent, saving NIS 1.2 billion, and the discretionary funds promised coalition parties under their agreements with Likud were cut by NIS 725 million (though half this sum will be restored in 2011).

The one exception is education, whose cut was slashed by two-thirds after Education Minister Gideon Sa'ar threatened to vote against the decision on the grounds that his ministry could not absorb a 2 percent cut. As a result, Sa'ar ultimately voted in favor.

The meeting was stormy and lasted more than four hours - due almost entirely to a last-minute stumbling block raised by the main beneficiary of the change, Defense Minister Ehud Barak.

Barak, who is also Labor Party chairman, objected to the planned 20 percent cut (NIS 201 million) to money Labor was promised under its coalition agreement. Instead, he argued, the extra funds for his ministry should be financed entirely by increasing the deficit - thereby preventing the need to implement cuts in other ministry budgets, which, he charged, would hurt the poor.

But Finance Minister Yuval Steinitz objected vehemently, saying this would damage the government's economic credibility and could result in Israel's international credit rating being lowered.

The ensuing conflict raged both in and out of the cabinet, with anonymous "associates" of both men exchanging insults via the media while the debate proceeded inside. An associate of Steinitz, for instance, accused Barak of "preferring narrow political considerations to security needs," while an associate of Barak's accused Steinitz of "playing honor and ego games."

At one point, an exasperated Steinitz proposed scrapping the defense increase entirely and approving only the swine flu funding.

Ultimately, Prime Minister Benjamin Netanyahu was forced to intervene: The session was recessed while he met privately with Barak for more than an hour. Subsequently, all the Labor ministers voted in favor of the motion. Barak's office later said that changes had been made in the proposal to ensure that the cuts would not harm the poor.

The ministers who voted against, however, charged that the cuts would indeed hurt the poor. Shalom added that he saw no justification for increasing the defense budget in any case, while Shas complained that it was not consulted about the move. Labor ministers also complained that the treasury had drafted the proposal without consulting them.

But Likud sources said afterward they believed Barak staged the entire fuss to serve his internal political needs and show his party that he was not Netanyahu's rubber stamp.

In response to the decision, Kadima, the main opposition party, accused Netanyahu of undermining education, welfare, immigration and public security for the sake of his own political survival.

MK Shelly Yachimovich, one of the Labor Party's "rebels," also blasted the decision, terming it "a historic precedent: the head of a social-democratic party working with his own two hands to destroy welfare, education, employment and housing."