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Gershom Gorenberg: Chelmonics

The new budget represents the economics of the absurd.Out of the vast press reports on next T year�s proposed budget for the State of Israel, two details caught my eye. First detail: Finance Minister Silvan Shalom intends to change the rules for receiving "guaranteed income," the local equivalent of welfare. Starting next year, single parents with children under seven would have to show that they�re working, or trying to work, before the state chips in to bring them to a minimal income level. Second detail: The finance minister seeks to eliminate all the discounts that people on guaranteed income now receive. That includes the discount on day care.

Apparently, a single mom with a 3-year-old whose husband has vanished should look for minimum-wage work -- with the incentive that if she actually finds it in today's economy, she'll have to pay more, not less, of her paycheck for child care. Or maybe she should leave the kid at home for the day in front of the tube -- except that the finance minister plans to eliminate the discount that recipients of guaranteed income get on the state�s TV tax. When you don�t pay the tax, by the way, men show up at your door to confiscate the TV. Presumably, the 3-year-old should head down to the street to find some drug dealers and other delinquents to hang out with. There may be more available, since the proposed budget includes cutbacks in the state prosecutor�s office.

Those examples aren�t out of place in the new budget. They are representative of what could loosely be called the economic priorities and thinking of the finance minister, backed up by Prime Minister Sharon. But it�s worth providing some context.

Once, Israel was a relatively poor but hard-working country with socialist (remember that word? It was popular in the 20th century.) leanings. The assumption behind public policy was that we were all in this experiment of creating a country together, and the economy should serve all citizens. The state subsidized daycare to help mothers work. If you were unemployed, you could sign up for a government-funded retraining course, and if you were an immigrant who�d arrived at an age when you couldn�t get a job, you got guaranteed income payments. Over the last two decades, that approach has faded. The Labor party, which claimed to represent the working class, and the Likud, which actually got blue-collar votes, showed a remarkable bipartisan spirit at economic "liberalization," which means that as the country got richer, the poor got poorer.

But economic growth ended when the intifada began. Tax collection is down; big deficits loom. In the name of dealing with the economic crisis, Shalom and Sharon have decided to get rid of anything left of social responsibility. Even by free-marketeer standards, the new budget represents the economics of the absurd. The National Insurance Institute -- the government body that handles guaranteed-income payments -- says that 108,500 of the 152,000 families getting the assistance will lose some or all of their stipends. Worst hit: Those who are actually working at low-paying jobs, and will get less under the new rules. Meanwhile, government retraining programs will be scaled back. At the press conference when he presented the budget, the finance minister said: "Our goal is to provide an incentive for going to work." Translation: If you�re out of work, you must be lazy. Couldn�t be, say, because the tourism industry has collapsed. Shalom would also like to slash the defense budget. Perhaps someone will explain to him that we�re in this mess because of an armed conflict.

Oh, yes. The one thing Sharon and Shalom haven�t touched is government funding for settlements. In fact, there�s not one person in the country who can say what portion of the national budget is spent subsidizing settlements, beyond "a reeeal lot." The money does not go through a Colonial Office or even a euphemistically named Ministry of Judea and Samaria. It is hidden in uncounted lines of the budget. A recent report by the B�Tselem human-rights group described some of the outlays. The Housing Ministry subsidizes loans to home-buyers in "national priority areas," which includes most settlements. The Education Ministry gives teachers in settlement schools benefits including a four-year boost in seniority; the Labor and Social Affairs Ministry does the same for social workers in the territories. The Finance Ministry gives Israelis who have moved out of Israel to the territories a break on income tax. The Interior Ministry gives more money per capita to the local governments of settlements than it does to towns inside Israel. This is just part of a long list.

Some subsidies are even harder to trace. Accountants would have to go school by school to check the advantage in class size of living in Efrat or Elon Moreh rather than Jerusalem. There�s no separate section in the Defense Ministry budget for guarding settlements, or for paying reservists most of their civilian salaries while they do the work. A reservist I interviewed recently told of a squad of 23 soldiers guarding an outpost where 19 settlers live. There are more extreme cases.

Ariel Sharon has said that the fate of Netzarim, archetype of a small and isolated settlement, is "the fate of Tel Aviv." The budget shows his real attitude: that Netzarim is much more important. The fundamental assumption of economic policy, in the midst of the War for the Territories, is that the economy exists to serve the settlements. If we don�t starve single moms in Tel Aviv to pay teachers more in Beit El, we�ll be surrendering to terrorism.

We�re all taught that Jews came to this land from nearly every country on earth, from Russia, Iraq, America, Tunisia. It�s not true, friends, not true. Just look at the budget. Outside of you and me, they came here from Chelm. Or at least our leaders did.