Discrimination? The 2003 cuts hit everyone
Ruth Sinai
Haaretz, 8 December 2002
An unemployed couple with two children and no other source of income gets NIS 2,925 a month in guaranteed income allowances. Add to that a child allowance of NIS 300, relief on the TV license, and discounts on visits to doctors and medicines, public transport and city taxes.
But an unemployed couple that starts getting guaranteed income allowances next month will have to make do with NIS 2,333, and a child allowance of NIS 300, meaning NIS 600 less. Except for the discount on city taxes, they won't get any of the other discounts that the other couple receives.
The government's cuts are the crowning achievement of what the treasury refers to as "the reforms in the labor force," and what its opponents are describing as the destruction of the social security net that has been stretched beneath the poorer members of society for 50 years. They are included in the economic arrangements bill, a banal administrative title for a harsh blow to 100,000 needy families, tens of thousands of single-mother families, the elderly, battered women, poor people accused of crimes, and just plain ordinary citizens who are not wealthy.
"There's never been such an all-out assault on the National Insurance Institute and the poor," says Leah Ahdut, deputy director general of the NII for research and planning. Past economic arrangements bills included what Ahdut calls "minor" changes in the NII law. The government may have eroded unemployment insurance, for example, with economic arrangements laws, but it was done gradually, over more than a decade.
"Once, when NIS 20 million was cut from allowances, the Finance Committee would rise up on its hind legs and fight the treasury," she recalls. This time, the bill for 2003 has a NIS 2 billion cut that takes money away from the poor - and the Finance Committee is showing very little opposition. Most of its members are busy dealing with their political survival in their party primaries, and few show up to the committee's deliberations.
Saving the economic and social future of the voters interests them very little right now. There's nearly a wall to wall agreement that a reform is necessary in the labor force, so that some of the guaranteed income recipients, whose numbers have been growing by hundreds of percent in recent years, can get back to work. But there are disputes over what reform and how to implement it.
The treasury wants deep broad cuts in the minimal means of guaranteed income, to force the unemployed back to work - during a recession in which the economy is not only not creating jobs, but also losing them. But there's practically no debate between the opponents and supporters of the reform, because the subject is so deeply buried in the economic arrangements bill, along with dozens of amendments in other areas, from how city taxes are assessed, to taxes on pension funds and changes in the structures of the planning authorities.
Temporary permanence
"All these changes would never be done by the Knesset in any other way," says Prof. David Nahmias, a lecturer on political science at Tel Aviv University, who researched the economic arrangements bill for the Israel Institute for Democracy. The economics arrangements bill that accompanies the budget every year is living proof of the axiom that nothing is as permanent as the temporary arrangement.
It was invented in 1985 as part of the general economic stabilization program meant to halt raging inflation, which was heading toward the 1000 percent a year mark. The solution invented was a series of emergency regulations that was called, "the arrangements law for the state economic emergency." As Nahmias points out in an essay on the issue, the law was passed - over opposition from then-justice minister Moshe Nissim and then-attorney general, Yitzhak Zamir.
Nonetheless, 17 years later, the law has become a key instrument with which the government forces the Knesset to quickly accept the government's priorities, elegantly bypassing opposition and demands from the smaller parties. Its influence grew as the major parties shrunk due to the two-ballot electoral system.
Its supporters claim that the Knesset is too fragmented, and lacks any joint agenda, so the law is a vital tool enabling the making of decisions. Just as it was created to prevent the government from losing control over the budget, it is also perceived as the only way to block private member bills that endanger budgetary stability. Often it is used to suspend implementation of expensive laws that the Knesset passed.
Unlike ordinary laws, which must go through three readings in the plenum and a series of readings in the Knesset committees responsible for the relevant subject, the arrangements bill is mostly promulgated in the finance committee. It is brought to the Knesset about two months before the end of the year and because it is attached to the budget, there's enormous pressure on the committee to approve it quickly.
Due to the large number of articles in it and the truncated timetable there's no chance for a serious debate over the issues that are raised by the bill - and that's the whole idea of the law. "The economic arrangements bill allows and encourages political ambushes of various sorts," says Nahmias, adding the government uses the law "to speedily pass bills it would find difficult or impossible to pass in normal proceedings."
Thus a "democracy bypass road" is built on which the government not only amends laws that the Knesset passed through proper parliamentary procedure, but so the government can even annul laws it doesn't want. The government, in effect, forces the Knesset to bypass itself.
The 2003 economic arrangements bill, for example, would cancel a private members bill by Zevulun Orlev, MK (National Religious Party) and Eitan Cabel, MK, (Labor) to categorize security jobs at schools as the kind of job for which demobilized soldiers get grants. Another article in the arrangements bill cancels a NIS 8,000 grant to women who get out of battered women's shelters, money that is sued to help them start a new life and get away from their spouses. The expected savings is only NIS 6 million, which makes the amendment particularly petty.
Who decides?
The budgetary ramifications of Article 19 are also not very clear. It says that Employment Service medical boards will no longer be able to decide that people are unemployable for health or psycho-social reasons, so they should get guaranteed income. Only the center for alcohol and drug abuse, or probation officers, will be able to decide whether an applicant is eligible for guaranteed income.
That means that people who are not addicts, alcoholics, or just plain criminals, but simply not healthy, will be forced to show up at the Employment Service, and take any job offered them, or they'll risk losing their allowance.
In addition to the difficulties that sickly unemployed will face, it's highly unlikely the Employment Service will be able to handle the traffic of tens of thousands of people who start showing up at its doors. But when the bill was being drawn up, nobody asked the Employment Service, nor was the issue even discussed in the Knesset Finance Committee at length.
In general, the pace at which fateful decisions regarding the lives of the poor are made - both in the economic arrangements bill and in other places - is dizzying compared to the pace with which the committees move on issues that affect the wealthy. It took 15 years and six committees until Finance Minister Silvan Shalom decided to put a 10-15 percent tax on capital gains.
In effect, it is not the government that decides on the content of the bill. The treasury writes it, often neglecting or rejecting the views of some of the ministers. For example, many of the amendments to the NII Law included in the 2003 economic arrangements bill are being proposed against the wishes of Labor and Social Affairs Minister, just as amendments to the 1998 Health Insurance Law were made against the wishes of the Health Minister.
"The economic arrangements law, like the entire process of passing the budget, proves just how dominant the treasury and the budget department are over the government and Knesset," says Nahmias. The real meaning of that dominance is that it is treasury's officials who effectively decide the social agenda in Israel.
Economics lecturer Moriah Avnimelekh and Prof. Yossi Tamir, a former director general at the NII, explain the process in their book, Revaha Mitakteket (Welfare Tick-tock). As an example of the power in the hands of the treasury officials - at the expense of the government - they write that Aharon Fogel, as budget director at the treasury, bragged that he routinely postpones the debate in the cabinet over the really difficult issues to late at night, when most of the ministers are falling asleep.
Fogel didn't need to work so hard. Often, the government gives up the prerogative of rule. When Prof. Shlomo Ben-Ami created a precedent and submitted an alternative budget to the Barak government - to which Ben-Ami belonged - it was received with scorn. Instead of using it as the basis for establishing social goals, the government gave it a miss and surrendered to the plan from the treasury, which over the years has adapted the role and image of protecting budgetary sanity and financial stability in the country.
`They get alimony'
Thus, it's not only ministers who don't know what's in the economic arrangements bill. Most of the MKs, who are supposed to protect the public from the treasury's decisions in particular and the government in general, don't bother to study the material. When the finance committee reached the article cutting aid to single mother parents, one of the Shas MKs asked, "what's the problem, they get alimony."
But many - probably most - single mothers don't get alimony, and if they do get over a certain amount of alimony, they are not eligible for guaranteed income. If their spouse doesn't pay and they get alimony through the NII they are in a category that will also be hurt in the 2003 budget as a result of the economic arrangements bill. This states that single mothers who get guaranteed income have to start showing up at the Employment Service when their child reaches the age of two. Until now, they've only had to start doing so when their child reaches the age of seven.
It's not a bad idea, but if the mother does find work, there's no chance for most that what they'll be paid will enable them to pay a day baby sitter or send their child to a day care center.
Thus according to Leah Ahdut, a certain percent of those women won't be able to go to the Employment Service to get jobs and will have to forgo the NII allowances, so it's not at all clear how they'll survive. "It's very easy to stick your hand into these peoples' pockets. There's no overall view of the system and comprehensive treatment of the problems.
Everything is patchwork," says attorney Sharon Avraham-Weiss, from the Association for Civil Rights in Israel, which together with some other social issues groups are lobbying to minimize the damage that will be done by the economic arrangements bills. She wrote up a detailed document listing many of the specific ways the bill will hurt the poor, and passed it on to the committee members.
Among other things, the document points to decisions that actually contradict the treasury's own logic. For example, Article 53, proposes compensating employers who hire people on guaranteed income. But the article doesn't state that the employer has to increase his own labor force to get the compensation from the state.
Thus, an employer can fire a veteran worker and hire a new, cheaper one. "In other words, the work force won't grow, the unemployment reservoir won't shrink, and the employer will get NIS 1,000 for every worker he has," Avraham-Weiss points out.
One of the most venerable of the groups, which will be hurt worse than most by the bill, are the unemployed over the age of 46, who until now were eligible for guaranteed income allotments 25 percent higher than the regular guaranteed income allotment. But those who become unemployed in the coming year won't get the increased monthly grant.
Thus a couple with two children who were eligible for NIS 3,477 will get NIS 2,333, an NIS 1,199 loss a month. Those who do get the NIS 3,477 already, will keep getting it, but reduced by 21 percent to NIS 2,716.
The treasury will save NIS 100 million and says the purpose of the change is to encourage people to go to work - but it is difficult for people that age to find work even at times of a growing economy. Another difficulty that wasn't taken into account is finding Israelis who can provide care to the chronically ill elderly who need supervision 24 hours a day.
The economic arrangements law cuts 30 percent off the allotment for nursing, if it's a foreign worker who is doing the job. In effect, says a position paper by the research department at the NII, this is a fine on the poor elderly who need the nursing allowance, while others, who enjoy higher income, are allowed to hire a foreign worker without any such "tax."
"Nobody gave any thought to the problem of the elderly who cannot find an Israeli worker to stay with them 24 hours a day and the higher cost of such Israeli workers on shifts," says the NII document.
