Who Is for Social Welfare?

On the eve of the elections, Olmert announced that he planned to raise university tuition. But this week, he retracted plans to implement such a change. The cause? Populism.

"This will be a compassionate budget," said Prime Minister Ehud Olmert, in a pathetic attempt to repel the waves of criticism. He also managed to spin the story, presenting himself as the "good guy" who succeeded in overturning several edicts by the "bad guy" Finance Ministry.

But the truth is that Olmert overturned almost nothing. He did not change the postponement of a minimum wage increase or the freeze on child allowances. His only "achievement" was not raising university tuition. But that was introduced by the treasury in the knowledge that it would be removed from the list of "harsh edicts" during the cabinet's budget deliberations next Tuesday. Education Minister Yuli Tamir was supposed to get credit for this achievement, but Olmert stole it from her.

On the eve of the elections, Olmert festively announced that he planned to raise university tuition. But this week, in an outburst of populism, he hastened to give in to the sector that is the least weak, but is vocal and able to strike and apply pressure. And thus we learn once again that it is not those in need who receive the money, but those with political clout.

Defense Minister Amir Peretz and Minister of Industry, Trade and Employment Eli Yishai were not impressed by Olmert's spin either, and they announced that they would vote against the budget, because they are "social welfarists." But who is really in favor of social welfare?

In Israel, a person is defined as pro social welfare if he wants to restore child allowances and income maintenance payments to their former size, opposes budget cuts, wants to raise taxes, is not afraid of increasing the deficit and is vehemently opposed to reforms and privatization. These social welfare advocates do not want to know that over the past 20 years, the government raised child allowances and income maintenance payments, but poverty actually grew rather than declining. Eventually, it was not worthwhile to go out to work. It was preferable to live on the allowances - albeit in poverty - and to have large families with 10 children, with each additional child automatically joining the poverty statistics.

The fact is that now, after the cutbacks in the allowances, more people are entering the job market, even among the ultra-Orthodox. The fertility rate in the Bedouin sector has plummeted and that in the Muslim sector has declined as well.

The transition from allowances to work is the true social revolution, and the government should encourage it by means of subsidized day-care centers and effective job training.

The increases in the budget, the deficit and taxes are also dangerous steps. After all, the entire Western world, including socialist regimes in Europe, is struggling to decrease the government's share in the economy. Are they all mistaken? A large deficit leads to a rise in interest rates and harms the weak: those who have mortgages and overdrafts. Higher interest rates and taxes lead to a decline in investments, which is bad for employment and growth - without which, the treasury coffers will be empty and all the anti-poverty programs will evaporate.

Due to the breach of the budget ceiling and the deficit target for 2007, forecasts of growth are already declining: Instead of enjoying a growth rate of 5.5 percent, we will have to make do with about 4 percent. This means more unemployment, lower wages and harm to the weaker sectors.

The "social welfarists" are also opposed to reforms that improve the standard of living, such as introducing competition against Bezeq, which lowered the cost of long-distance calls and cellular phones. They are opposed to privatizing government services, such as institutions for special-needs children, for example.

Israel has 58 institutions for special-needs children: nine sponsored by the government and 49 that are private or run by nonprofit associations. Where should one enroll one's child? In the government-sponsored ones, of course, opponents of privatization will say. But the fact is that there is a long waiting list for the private institutions. Akim, the national association for the mentally handicapped, recently petitioned the High Court of Justice against the state (in the name of several parents), demanding that the government raise the level of treatment it provides to equal that provided by the private institutions. It turns out that not only is the level of treatment better, but the counselors' attitude, the food and the cleanliness are also superior in the private institutions - which cost the state 36 percent less: NIS 8,000 a month per child, as compared to NIS 12,500 in a government institution. So maybe the social-welfare advocates are mistaken after all?