20th Caesarea Forum: The State Budget in Light of the Social Protest

The session began with a presentation of the working group's findings by Prof. Zvi Eckstein, Former Deputy Governor of the Bank of Israel. Mr. Gal Hershkovitz, National Budget Director at the Ministry of Finance, then offered a response. Insights were then received from Dr. Karnit Flug, Deputy Governor of the Bank of Israel; Mr. Nehemia Shrasler Senior Editor of Economics and Society for Haaretz; Professors Joseph Zeira and Omer Moav of the Hebrew University, and Prof. Eran Yashiv of Tel Aviv University. Minister of Finance Dr. Yuval Steinitz closed this part of the session.

Professor Manuel Trajtenberg, chairman of the committee for economic reforms established after the social protests in Israel in the summer of 2011, then addressed the issue of the state budget, focusing on the question of whether we are where we wanted to be when the protests drew to a close nine months ago. Trajtenberg said that Israel’s current level of taxation does not allow for necessary defense and civilian spending while reducing the level of debt. Despite the rise in the deficit target announced by Prime Minister Netanyahu earlier in the week, Trajtenberg said that there is no alternative but to raise taxes permanently.

Trajtenberg said he regretted the recent violence that took place during renewed protests in Tel Aviv, saying it brought back painful memories from his childhood in Argentina, when he was afraid to go out to the streets for fear of being beaten. “When violence in the street begins, it is like war," he said. "You know where it starts, but you never know where it ends.” Trajtenberg warned that “we don’t want our children to have those memories” and called on both sides to return to peaceful interaction.

In order to guarantee that social issues become more of a priority for the government, Trajtenberg called for instituting permanent mechanisms that will mandate consideration of the effect of all government decisions on social equality, rather than consideration of budgetary impact alone. He stressed the importance of balancing fiscal and social responsibility, saying that the Israeli Government must step up efforts to abolish social barriers and increase social services, while maintaining a reasonable deficit and allowing for economic growth. Trajtenberg said that although the Israeli economy is strong, Israel is situated in a “tough neighborhood” that necessitates high defense expenditure, and that the country is still bound by a burden of past debts.

In response, Mr. Itzik Shmuli, Chairman of the Union of Israeli Students and a leader of the social protest of the summer of 2011, addressed the Conference. He began with praise for the conference organizers, expressing his appreciation for the fact that they expanded the economic dialogue to include citizens. He then outlined his definition of social justice and expressed his hopes for the future. "In my eyes," said Shmuli, "social justice is when… my government provides equal opportunity for success to every one of its inhabitants." He posited that the social protest expressed the desire of citizens to have a "say" in the government's priorities. Shmuli accused the government’s response to the social protest of being largely cosmetic. "The Trajtenberg Report," he asserted, "was not implemented, and its central recommendations for affordable housing were essentially symbolic."

The student leader called on young people to vote in Knesset elections in large numbers, as it is the only way to change government priorities, and noted that the student union is already waging a campaign to encourage young voters to participate in upcoming national balloting. He asserted that government budgets must be reprioritized, saying that there can be no real economic growth without equality. Shmuli cited incorporation of economic social justice into Israel's political agenda, protection of the sacred principle of equal rights and duties, and revising the national budget with an emphasis on closing the wealth gap, as aspirations for the future and ended optimistically, saying: "we've certainly chosen the right time for debate."

 Social protest leader Stav Shaffir spoke in similar terms about her dissatisfaction with the current state of Israeli economic social policy. She noted that government spending on social welfare is amongst the lowest in the Western world, and that spending on students is the lowest in the OECD. Dispelling the optimism expressed earlier by Finance Minister Steinitz, she criticized the country’s economic leadership for boasting of fiscal health without providing for educational reform, adequate health care, public transportation, and affordable housing. Increased taxes and interest rates, as described by Finance Minister Steinitz, she argued, will not "create a changed perspective, and that is what we need." Shaffir called on those in attendance to imagine a different Israel, one with less socio-economic gaps. "We dream about a country where every child can realize his full potential, where I can care for my children and maintain a respectable pension plan, and where my I won't wait months for surgery when I am 70 years old," she said. "I want to be sure," she ended boldly, "that the outskirts of my neighborhood do not become impoverished ghettos."

Additional participants in the session included Conference Director Yarom Ariav, Bank Leumi Chairman David Brodet, Prof. Momi Dahan, Prof. Rafi Melnick, Prof. Dan Ben-David, Mr. Shlomo Dovrat, Mr. Erez Vigodman, and Mr. Shlomo Yanai. Minister of Finance, Dr. Yuval Steinitz, ended the session by highlighting Israel's economic successes.