Following a five-hour debate, the cabinet on Sunday passed the government’s biennial state budget which calls for a NIS 14 billion cut in spending in 2010. 20 ministers supported the budget supported by Prime Minister Binyamin Netanyahu and Finance Minister Dr. Yuval Shteinitz, while 10 opposed, including Labor and Shas Party ministers, as well as Likud Education Minister Gideon Saar.

Shteinitz stated this was only one aspect, explaining he now must reach agreements with the Histadrut National Labor Federation towards freezing salaries and other measures to stabilize the economy. He empathized with the tens of thousands whom have already lost their jobs, stating he understands the difficult painful and fearful economic realities, promising the government’s economic plan will extricate the nation from the current difficult realities towards a fiscally improved tomorrow.

One of the major opponents was Defense Minister Ehud Barak, who heads the Labor Party, who strongly objected to proposed cuts in defense spending. Barak stated that with the dangers facing Israel on a number of fronts, there cannot be any discussion of cutting military spending. Iran’s ongoing nuclear program was the impetus of Barak’s main objections.

It appears that at the end, defense spending will not be cut but Shteinitz is also calling for the postponement of emergency funds approved by former Prime Minister Olmert, including NIS 2.45 billion to cover the cost of Operation Cast Lead.

Part of Sunday’s cabinet decision means an expected NIS 18 billion government increase will only amount to NIS 4 billion in 2009, amounting to an annual increase of 1.7%. Shas and Labor ministers demanded an annual growth of 2.5% but Shteinitz remained opposed, insisting this would prevent the government from enlisting funds towards covering the large deficit. Shteinitz also expressed concerned regarding Israel’s credit rating abroad.

The cabinet voted in favor of a gradual lowering of the deficit, beginning in 2011, setting a goal of 1% of the national output by 2014.

While Labor leader Barak stated his party cannot accept a budget with no options for expanded spending if required in the future, while Shas leader Eli Yishai stated with confidence that he maintains a good working relationship with Shteinitz and he remains confident a mutually acceptable formula will be reached.

Labor MK Shelly Yacimovitz is among the outspoken opponents to the budget, which she insists will bring destruction for development areas, the unemployed, and the nation’s health and social services.

Kadima MK Yoel Hasson accuses the government of cutting the state budget to exhibit an air of fiscal responsibility on the one hand, while appointing “ministers of nothing” towards establishing its inflated cabinet.

(Yechiel Spira – YWN Israel)