The Defense and Finance Ministries continued to spar on Wednesday over the recommendation by the government-appointed Trajtenberg Committee to cut the defense budget by up to $3 billion to fund socio-economic reforms. The Defense Ministry on Wednesday night accused the Finance Ministry of conducting a campaign of lies and is examining possible legal recourse against it. Defense Ministry Director-General Maj. Gen. (res.) Udi Shani on Wednesday night sent a message to the defense establishment's legal counsel, asking if administrative or legal measures could prevent the Finance Ministry's campaign of lies and deception against the public and the defense establishment. The Defense Ministry went on to say that the Finance Ministry's attacks are designed to conceal its failures in managing the economic policy, which have led to social protests. Trajtenberg Committee member and Finance Ministry Budget Director Gal Hershkovitz cautioned against drawing too many conclusions from the recommendations, as they only partly reflect the full report. The full recommendations are going to have a much greater scope and will cover many more issues, he said. The battle between the two ministries erupted after Finance Minister Yuval Steinitz told Israel Hayom a month ago that the defense budget was bloated and that billions of shekels could be cut to fund education and social reforms. Steinitz said that 2 to 3 billion shekels ($554 to $831 million) could be cut per year from the defense budget starting in 2012, and that a total of 10 billion shekels could be saved. Steinitz also said that an additional 1 to 3 billion shekels could be saved per year if the Defense Ministry agreed to supervision of its budget and transparency. Steinitz said that the defense budget was only partly overseen, mostly due to sensitivity among defense officials and a lack of coordination between the two ministries. Currently the defense budget is not supervised by the Finance Ministry's budget division or the accountant-general. The Trajtenberg Committee, a panel of experts appointed by Prime Minister Benjamin Netanyahu in early August in response to the social justice protests that swept Israel this summer, is expected to propose, among other things, higher taxes for corporations and the wealthy, along with cuts to the defense budget, in order to pay for expanded social programs. The committee is due to publish its official conclusions on Sept. 29. Netanyahu is expected to make the final decision on cuts to the defense budget, although some Israeli media have reported that Professor Manuel Trajtenberg, who heads the government-appointed committee, asked Eyal Gabbai, the outgoing director-general of the Prime Minister's Office, to rule on the dispute between the ministries. Gabbai reportedly sided with the Finance Ministry and ruled in favor of a defense budget cut. Netanyahu is expected to meet with Barak and Steinitz in coming days prior to making a decision about the defense budget cuts. The Defense Ministry has denied Steinitz's claims, although Defense Minister Ehud Barak has called the social protests important in the past, and at one point said he would consider cutting the defense budget if a comprehensive plan was formulated to address the country's socioeconomic problems. The Finance Ministry is concealing from the public and the media the fact that the Defense Ministry has agreed to full transparency, the ministry said in its statement Wednesday night. An agreement on the subject was already signed between the Finance and Defense Ministries in 2006 that has been implemented in practice. The Finance Ministry's attempt to restrict the Defense Ministry's operations to the point that it can no longer function is dangerous both to democracy and security. The statement continued, The Finance Ministry's attempts to spin the subject of transparency regarding the defense budget are false from start to finish and constitute a grave incitement against the defense establishment. There is no precedent in any government office for the transparency implemented by the defense establishment in recent years, including the publication of its budget books, oversight by the Finance and Foreign Affairs and Defense Committees, and supervision by the National Security Council, among other things. The statement also said that the Defense Ministry is committed to social efforts, citing as evidence its employment of suppliers from outside of central Israel and conflicted border areas at a cost of billions of shekels per year; its evacuation of army bases following the start of the social protests in July; its reducing restrictions on constructing taller buildings throughout the country; its assistance for small and medium-size businesses; its preference for reservists and demobilized soldiers; and openness to new ideas. Trajtenberg has told Netanyahu that the defense budget cut is necessary to redistribute the overall state budget. The professor even told the prime minister that without the defense budget cut, There is no Trajtenberg, Israel Hayom has learned. The Trajtenberg Committee is expected to recommend canceling the planned 0.40 shekel per liter excise tax on gasoline planned to go into effect in January 2012. This February also saw the tax on gasoline reduced by 0.23 shekels per liter. The panel is also expected to propose canceling the planned tax increase on diesel fuel, coal and oil to drive down electricity prices, and reducing customs and sales taxes to increase the purchasing power of the poor and middle classes. The panel is also expected to propose tax benefits for low-income individuals and families, changing the tax brackets and various other incentives. Additional funding is expected to come from the addition of a new tax bracket of 48 percent on the wealthy (it has yet to be decided who falls in to that category), and increasing the tax burden on capital gains. The panel is also considering increasing taxes on lotteries and gambling. My role as minister of finance is to lower expectations and avoid illusions about the Trachtenberg Committee, Steinitz said Wednesday. We are currently in the most combustible global environment since the establishment of the state, the waves are very high and we are crossing a narrow bridge. If we deviate from anti-crisis policies and exceed the budget, we could crash into a deep abyss. Social justice protesters: Trajtenberg recommendations insufficient Social justice protest leaders attacked the Trajtenberg Committee on Thursday following reports on its upcoming recommendations, calling them insufficient and lacking. The solutions proposed fall short, particularly when it comes to the housing crisis, protesters spokesman Roy Neumann said. He added that the recommendations lacked any details on health care, social welfare and transportation, and expressed doubt that any changes could be introduced without first breaching the budgetary framework for 2012. Neumann said that recent statements by Steinitz on lowering expectations from the upcoming recommendations show the committee has no real mandate to introduce a new socially oriented budget. Neumann added that the protest would continue as long as the committee did not show a real willingness to address the housing crisis. The National Union of Israeli Students reacted with guarded optimism to the recommendations. There are some aspects that indicate a positive trend, but they are far from being enough, a spokesman said. He said it was unclear where the resources would be found for the proposed solutions and whether the changes could be followed through. As far as we are concerned, the answer is: This is not enough, he said. Student union head Itzik Shmuli, who has been a prominent figure in the protest movement, vowed to continue with the protests until the committee offers real solutions." "We are well aware of solutions that merely involve money exchanging hands and moved around," he said. Daphni Leef, who sparked the social justice protest when she pitched a tent on Tel Aviv's Rothschild Boulevard in July to protest the rising housing costs, took pains to stress that the protest movement will not end its activities until there is "fundamental change" in socioeconomic policy. "Israeli society does not need an Advil, but rather a new working agenda," Leef said. Echoing her fellow protesters' views, she reiterated the call for increasing the 2012 state budget, calling it the "only way to bring a budget that promotes real social justice in Israel." Meanwhile, the protesters' own committee, set up as an alternative to the Trajtenberg Committee, published its interim report on Monday. The committee, headed by Professor Yossi Yonah and former Deputy Bank of Israel Governor Professor Avia Spivak, recommends increasing the annual health care budget by 8 billion to 11 billion shekels; raising the minimum wage to 60% of the national average salary; increasing government allowances, and other changes. Steinitz dismissed the attacks by the protesters Wednesday, saying that nothing would satisfy the protesters. "My job as finance minister is to provide solutions to the citizens, not the protesters, he said.
