The Weekly Portion: The 'security or welfare' dilemma

The battle over the budget for 2009 is this week's major event. On Sunday, the cabinet will make its decision.

The choice being offered by the Treasury is "security or welfare", which originates from the economic world-view of Binyamin Netanyahu. In his years as Prime Minister and Finance Minister, he managed to damage both security and welfare. There was one thing he did succeed in doing: benefit the wealthiest 10% of the population, by cutting its taxes.

Israel lives in a neighborhood that is worsening by the day and faces constant serious threats from increasingly remote locations. The social safety net built in the first decades of the State's existence out of the values of the Labor movement, is gradually unraveling just when Israeli society is aging (as is happening in the rest of the Western world). Conversely, the Israeli economy is growing stronger, and Israel is in the 16th place in the world in per-capita income adjusted for purchasing power.

By contrast with this respectable position in income, Israel ranks 39th in educational achievements, and 28th in the number of hospital beds per-capita. These numbers indicate the fundamental flaw in the economic policy of the government of Israel: the fruits of growth are not being directed to the citizen's welfare, to his education, health or safety. They are going to the stratum with the highest income, which is why our society's wealth-gap is widening.

The economic world-view being practiced by Treasury officials, with the backing of Finance Ministers, takes an approach of true religious zeal toward the minimization of government expenditures.

What are these government expenditures? Health, education, security and so forth. This world-view has given rise to two pieces of legislation. The first is the tax-reform act of 2005, which as said granted tax-cuts of billions of shekels to the top ten-percentile. The second is a law limiting the annual growth of the national budget to 1%, which has since been raised to 1.7%.

In addition, the government has adopted the EU's "Maastricht Accord", which prohibits any year's budget deficit from rising beyond 3% of the budget. Actually there is no budget deficit in Israel: on the contrary, there is a surplus, which at the moment comes to NIS 2 billion for at least the first half of 2008. By comparison, some of the well-fed and 'enemy-less' European countries have reached the deficit limit of 3% and even passed it.

So where will we get the money for both home-defense kits and new and essential medicines? Here is my answer.

1. Budgetary growth should be linked to forecast market growth. For 2009, the forecast growth is about 3%. An increase of just a single percent in the budget adds NIS 3 billion.

2. Allow a 1% deficit. That's an increase of another 3.25 billion. With NIS 6 billion, several severe societal problems can be taken care of (basket of medicines, Holocaust survivors and more) leaving enough money to also build up the IDF, which is not keeping pace with the intensification of the threats.

A national budget is a reflection of the values of the government which presents it. A government that treats private profit as sacred while scoffing at the welfare and security of the ordinary citizen has no right to exist.