Olmert Slams Safety Net, but Offers No Alternative

Prime Minister Ehud Olmert surprised the heads of the treasury on Wednesday night at their meeting. Despite promises Olmert made via the press the day before in Washington, he did not propose his own plan for a safety net for pensions and savings at the meeting. He also did not name any figures, and did not talk about expanding the program to start at age 55 instead of 60 - as he had hinted he would in Washington.

The only thing Olmert said was that the treasury's plan was not good enough. He demanded that Finance Ministry officials meet with the senior staff of the Bank of Israel and with representatives of the National Economic Council in the Prime Minister's Office, and come up with a revised, improved plan.

Following Olmert's instructions the first such meeting was held yesterday afternoon by low-ranking officials from the three bodies to discuss improvements in the treasury's rescue plan.

Treasury officials told Olmert at Wednesday night's meeting there was no reason to provide a safety net for provident fund savings, and as evidence, no developed country has created one. They emphasized such a plan would be giving in to panic and pressure from politicians, the public and various interested parties.

Instead, said treasury officials, their plan would help those who needed it most - at a cost of NIS 10 billion. They warned Olmert that expanding the plan, as he and the Histadrut labor federation are requesting, would be very expensive and would harm state budgets for years to come.

Yesterday, Olmert gathered the heads of the largest Knesset factions for a meeting to discuss the treasury's emergency aid package, including not only the financial safety net plan but also the emergency economic aid plan including investments in infrastructure.

"I have called this meeting so we can reach maximum agreement since the plan is extremely broad. National agreement is important in this case. I intend to also hold discussions with a number of ministers and with Histadrut chairman Ofer Eini and Manufacturers Association chairman Shraga Brosh in an attempt to create a broad national agreement on these important matters for the Israeli economy," said Olmert at the beginning of the meeting.

He also thanked opposition leader Likud head Benjamin Netanyahu for his support. Netanyahu said there was a need to support the emergency plan because of the serious world economic crisis, and there was no reason to waste precious time on political arguments.

Finance Minister Roni Bar-On called on faction leaders to support the investment plan when the Knesset Finance Committee starts to debate it on Sunday, and not to condition support for one plan on the creation of a safety net.

Politicians on the committee are calling to make approval of the treasury's emergency aid package conditional on improvements in the safety net for pension savings, and almost all committee members are behind the demand. In addition, there are calls for increasing the 2009 budget as part of the plan, despite treasury opposition.

At the treasury they are also admitting they made mistakes. The decision to keep Olmert and his economic adviser, Prof. Manuel Trajtenberg, the head of the National Economic council, out of the loop on the economic plans angered the prime minister and his staff. This is what provoked Olmert's comments in Washington this week and led him to intervene and "teach the treasury a lesson," just as with the dispute with the universities. But besides the personal affront to their egos, Olmert and Trajtenberg had a valid complaint that opinions on issues of national importance could not be approved without their input.

A senior treasury official explained the mistake, saying the ministry was too worried that information would leak to the press and others, and Trajtenberg should have been included in the planning.