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Intense Budget Talks Today

The budget for the year 2007, to be brought for Cabinet approval today, is both a political and social hot potato for Kadima, Labor and Shas.
By Hillel Fendel
First Publish: 9/12/2006, 8:37 AM / Last Update: 9/12/2006, 11:24 AM

The budget, standing at 283.1 billion shekels ($64.5 billion), will be the subject of intense negotiations today within and between the various parties. Prime Minister Olmert says he intends to bring it to a vote today, no matter how long it takes. Following today's vote, it must still pass the Knesset Finance Committee and the Knesset itself.

The proposed budget's basic composition was changed drastically as a result of the war in Lebanon, and calls for an 8.2 billion shekel supplement to the Defense Ministry over the next three years. The Ministry actually demands 24 billion, to pay for improving the IDF's preparedness and training, and to prepare for a future war; Olmert has appointed a committee to examine this demand.

Currently threatening to vote against the budget proposal are only six ministers, thus that Olmert is all but assured a majority before the more difficult battle in the Knesset. However, he must still assure today's Cabinet majority.

The Six Threats
The ministers whose support Olmert must worry about are Shimon Peres of Kadima, Labor's Yuli Tamir, and the four Shas ministers.

Education Minister Tamir says she refuses to vote for a budget that does not provide more funding for higher education. "But passing a budget is a process," she said this morning in a conciliatory fashion, "and today is a long day. Let's see what happens."

Minister Peres, who is responsible for the development of the Galilee and the Negev, says he will not vote for the budget, and will even resign from the government, if funding for the Negev is not included. At present, not one agorah is budgeted for this purpose. Peres met yesterday with Shaar HaNegev Regional Council head Shmulik Rifman.

Shas, headed by Trade Minister Eli Yishai, says it cannot vote for the budget as is presently formulated. "It is muktzeh," Yishai told the Knesset, using a Talmudic term that describes something untouchable. However, negotiations with Shas will continue as well.

Labor Party leader Defense Minister Amir Peretz, a former head of the Histadrut Labor Union and a champion of working-class rights, has signaled his approval of the budget. He has said that he would not want to "detonate" the coalition on the budget issue, and has even given in on the Finance Ministry's demand for a postponement of the minimum wage rate. Peretz says he will insist that the minimum wage be raised some time in 2007, however.

The two ministers of the Pensioners Party are expected to vote in favor of the budget, following the formation of a Retirees Office and the addition of 100 million shekels to the welfare budget. They still demand more money for the Health Ministry, however.

Budget Cuts
The budget includes cuts in welfare allocations, as well as a postponement of the planned National Insurance Institute (NII) welfare payments to the elderly and families with children. Former NII chief Prof. Yochanan Shtesman told Army Radio today that the average monthly allocation to the elderly is some 1,600 to 1,800 shekels, "and by not raising it the 2% that was promised, it makes it even more difficult. It may not be a lot of money, but for those who live on these sums, it is very much."

Shtesman said that the government's fiscal approach is simply "wrong." He said that the monthly allowances are "like a deduction in taxes, and by not raising the allowances, it's like raising taxes for the underprivileged classes - while at the same time reducing taxes for the rich. This is what has happened over the past four years."

Asked about the claim that if the wealthy are taxed too highly, they will simply take their money to foreign countries, thus hurting the poor, Shtesman said, "This is ridiculous. It has never happened before, and in any event, the conditions for the rich here are better than anywhere else."