Taking Stock / Where to Begin

The Finance Ministry is working diligently on preparing new economic policy - a plan that will stop the economy's continued deterioration.

With the changing of the ministerial guard, the treasury's tune has also changed: senior officials admit in internal discussions that the risk of financial crisis is rising, since the country cannot withstand another year of contracting economic activity.

There is no need to wait for the treasury plan to guess what its focus will be: deep cuts to government budgets - mostly those of welfare ministries - a reduction in public sector wages, and direct and indirect tax hikes.

Like the last budget cut, the one about to be submitted to the cabinet will harm mostly society's weakest sectors - through hitting unemployment benefits, taxing fruits and vegetables, and cutting welfare subsidies.

Hard moves to support

Even if some of the budget cut measures have economic logic - they are aimed at creating a healthier labor market - and even if it is clear to everyone that the government must cut spending to avoid further deterioration, it is hard to support these measures.

The reason is simple - it is impossible to hurt the weaker sectors before the government hurts the strong; it is impossible to touch the hundreds of thousands of average wage earners struggling under the weight of the recession before handling the huge gluttonous and well-padded gang that is the public sector.

Before the government starts off on the unemployed, the vegetables, the fruit and the hundreds of thousands of workers earning low wages, it must start with its own high and mighty. Only after handling the mightiest sector can it approach difficult and painful steps with clean hands.

l The government must cut the number of ministers and deputy ministers by at least 20 percent before any budget cut. It is inconceivable that the prime minister approve a cruel budget cut when the "management" of Israel's largest and most important organization is inflated.

l The government must cut spending for all the senior officials' bureaus in the public sector by 20 percent - starting with the senior officials themselves and including their aides, spokesmen, secretaries, consultants and the rest of their perks. In most economic parameters, the economy has gone a decade back in time - senior official salaries can go back that far too.

And not just the hundreds of senior officials in government service, but also the thousands of senior officials in the "expanded" public sector: all those entities that rely, directly or indirectly, on taxpayers' money.

l The government must reexamine the necessity of the hundreds of chauffeur jobs for the expanded public sector's senior officials. A chauffeur is a nice thing, comfortable, and sometimes streamlines the official's work. But in today's reality, with the ax wielded every day on the weakest sectors of society, it is inappropriate.

l The treasury's accountant general should instruct the entire expanded public sector that no more business class airline tickets are allowed. If all the senior executives at Cisco, a company no less successful than the state of Israel, can fly tourist class, our senior officials can also sit in the back of the plane as long as the economy is deteriorating at this rapid pace.

l The cabinet must decide on a gradual wage cut for all the high wage earners in the expanded public sector: cutting 20 percent from the salaries of everyone in the public sector earning more than NIS 50,000 (and there are many), 15 percent from those earning NIS 30-40,000, 10 percent on those above NIS 20,000, and just 5 percent from those whose pay stubs read NIS 15,000 or more.

Only after this across-the-board, uncompromising cut is implemented will it be possible to consider hurting the thousands of Israeli families whose income is far far lower. It will be important to calculate into the cost of all those senior officials the cost of their non-contributory pensions, particularly those with varied and creative arrangements that allow them early retirement or increased pension payments.

There are tens of thousands of public sector employees whose real wage costs are 30-60 percent higher than their reported salaries due to special pension arrangements. The pensions must be cut at similar rates.

l The state must adopt the inheritance and estate taxes recommended by the Ben-Bassat Commission. This is the most just tax in the tax system. This is a low tax imposed only on millionaires. It is a necessary tax in a country about to set forth on a cruel budget-slashing journey that will leave in its wake tens of thousands of weak victims.

l Deep cuts in the "perk baskets" of MKs: abolishing their chauffeurs and cutting budgets for parliamentary aides and the rest of their inflated benefits packages. The Knesset is a bubble where everything is wonderful, completely detached from the realities of the country, and only when legislators feel the cuts in their own flesh, only then will they understand the severity of the economic situation and start making more responsible decisions.

l The message is simple: The conditions of senior Israeli public sector officials are inappropriate, unseemly and unacceptable in a state where per capita GDP has fallen for three consecutive years and is expected to keep shrinking in the foreseeable future.

The biggest contribution of all these measures will not be only in the hundreds of millions of shekels they will save the state budget. These cruel measures are necessary to try to rehabilitate public confidence in its elected officials and recruit support for an austerity plan that attempts to treat the economy's ills.