Cabinet authorizes lateral budget cut

After many long hours of deliberation, the cabinet authorized the lateral budget cut to government ministries on Thursday. Twenty three ministers voted in favor of the cutback, and six voted against it. The cutback will total about NIS two billion (about $500 million).

The ministers who opposed to budget cut were Minister Silvan Shalom, four Shas ministers, and Minister Hershkowitz from the Bayit Hayehudi party.

Minister Shalom said that he opposed the move because "the state budget cannot be enslaved to defense. Only two months ago, the Knesset passed the biannual budget that contained a new cutback that we agreed two because of the financial crisis. Ever since, income has increased much more than expected, and the deficit is lower. The cabinet needs to decide on its priorities.

"For years I have claimed that resources must be diverted from defense into education, welfare, and the periphery. There is no reason to harm these issues, and there is no need to transfer more money to defense," added Shalom. "What are the new items that we didn't know about three months ago at the cabinet meeting held in Beersheba? Therefore, I voted against."

Hit to education minimized

Following threats made by Education Minister Gideon Sa'ar that he would resign from his post, the Finance Ministry and the Education Ministry reached an agreement that the education budget for 2009 and 2010 would be cut by only 1%. This is 75$ less than the budget cut originally planned for the education system (2% each year).

The budgets of the rest of the government ministries, on the other hand, will each be rolled back 2% a year. Estimates indicate that the money needed to reduce the education cutback will be taken from budget surpluses and not from breaking budgetary discipline, as was suggested by Ehud Barak, or from cancelling tax reforms.

Finance Minister Steinitz, for his part, promised behind closed doors that the budget will not violated, which he claimed "would be a bad signal to investors that is likely to damage the credibility of the Israeli economy and Israel's credit rating."

Education Minister Gideon Sa'ar, who expressed his opposition to the budget Wednesday, said Thursday that he was unsure if he would remain in his position should his ministry's budget be cut. "We have reached a real red line in education. It is similar to the situation in the Kinneret. It is uncertain that I will be able to remain in this role should the cutback be put into effect."

During the cabinet meeting, a debate waged between Minister Steinitz and Labor Chairman Ehud Barak, who was accused of opposing the budget for political, and not defense, considerations.

Shas also joined Labor in their opposition to slashing social ministries. Housing and Building Minister Ariel Atias said he is concerned that nothing in the Finance Ministry's position changed in recent days. "Nothing significant or new or significant has occurred in what was already known to the budget's authors. This does not project reliability for the Finance Ministry to the coalition partners. Here there is a very significant hit to the social needs that Shas respresents."

Those close to Labor Chairman Ehud Barak said in response to the compromise, "In his conversations with the prime minister, Barak advocated preventing harm to the single mothers, to the pensioners, to professional training, to infrastructure, to agricultural towns. He advocated preventing damage to the backbone of Israeli society, and also to the weak sectors of the population."

Roni Sofer contributed to this report