Minister storms out of cabinet as Netanyahu attempts to push through wartime budget

Despite Prime Minister Benjamin Netanyahu’s pledge to sit and deliberate “as long as necessary” to pass an amended 2024 budget, Sunday’s government meeting quickly descended into acrimony, with cabinet members trading insults and Education Minister Yoav Kisch, of the premier’s own Likud party, storming out of the room in rage.

“I am not interested in hearing from either you or your people,” Kisch snapped at Finance Minister Bezalel Smotrich during the discussion, according to Channel 12 news. Responding to Netanyahu’s attempt to calm down the situation, Kisch declared he was “not interested” and walked out, followed by Culture and Sports Minister Miki Zohar.

In response, Netanyahu scoffed that “if you exited the cabinet meeting and didn’t brief the media — did you truly exit the cabinet meeting?” This prompted Zohar to reply that he was “just going to the bathroom.”

Following his clash with Kisch, Smotrich also reportedly criticized recently appointed Energy Minister Eli Cohen for asking “questions out of a lack of understanding.”

The Finance Ministry’s current proposal calls for an overall budget increase of NIS 68.4 billion ($18.3 million) alongside an across-the-board spending cut of three percent from all government ministries, as well as a reduction of NIS 2.5 billion ($670 million) out of NIS 8 billion in coalition funds — discretionary funds earmarked for pet projects of MKs and ministers.

“We must all share in the burden,” Netanyahu told the cabinet at the beginning of their meeting on Sunday afternoon, arguing that the ongoing war against Hamas requires both “adaptations” and an increase in the deficit in order to “conduct the war in the coming year and complete it.”

Education Minister Yoav Kisch at the ministry ahead of the opening of the school year, August 31, 2023. (Yonatan Sindel/Flash90)

“We will also submit compensation and grants for reservists, the families of reservists, and the self-employed; they deserve a whole range of benefits. We are also submitting an increased budget for rebuilding the communities and the kibbutzim, and, of course, for returning the evacuees,” he stated.

“I expect that in the coming day, in the next 24 hours — I am prepared to sit here as long as necessary — and if possible, in the coming night, we will finish this. We will submit a war budget for the State of Israel, a budget that ensures our security and our future. I thank you in advance,” he said.

Deep cuts

According to the proposal currently being debated by the cabinet, the Education Ministry budget would be cut by some NIS 891 million ($239 million), that of the Health Ministry by NIS 440 million ($118 million), and the Welfare and Social Affairs by NIS 163 million ($44 million).

While the budget proposal eschews individual tax increases, it does include a 1% increase in the VAT slated to go into effect in 2025, bringing it to 18%, as well as new taxes on bank profits and tobacco.

Notably, the current plan does not contain any provisions for reducing the number of government departments, despite the Finance Ministry’s recommendation that 10 superfluous government ministries — including the Settlements and National Missions Ministry, the Jerusalem and Jewish Tradition Ministry and the Intelligence Ministry — be closed to cover the wartime budget shortfall.

“You need to make actual decisions” about what is critical and what isn’t, rather than just cutting budgets across the board, Tel Aviv University economics Professor Itai Ater, a senior fellow at the Israel Democracy Institute and the head of the Israeli Economists Forum, told The Times of Israel on Sunday.

Cutting coalition funds and extraneous ministries would save billions of shekels. and while even that would not be enough to offset the costs of the war, it would go a long way toward “building confidence that the government can make tough decisions,” he said.

Where to cut is a “political hot potato,” Deputy Knesset Speaker Moshe Roth (United Torah Judaism) told The Times of Israel on Sunday, arguing that, while the amount saved by shutting down these ministries would be “meaningless” compared to the overall budget, his party had real concerns about reduced education and healthcare budgets.

“I definitely agree that there should be cuts, but I think they should be done in a smart way that shouldn’t hurt more necessary public services than are needed,” he said.

Prime Minister Benjamin Netanyahu (right) speaks with Finance Minister Bezalel Smotrich during a cabinet meeting at the Prime Minister’s Office in Jerusalem on June 18, 2023. (Amit Shabi/Pool/File)

War cabinet member Benny Gantz — who had previously urged Netanyahu to cut coalition funds and whose National Unity party did not vote for the amended 2023 budget — has stated that his party has yet to decide how it will vote on the changes to the 2024 budget.

Despite this, National Unity MK Gideon Sa’ar declared that he intended to vote against the budget because he felt it did not go far enough and lacked “politically difficult decisions and decisions that constitute a personal example,” such as salary cuts for elected officials.

Grumbling in the coalition

Other members of the coalition, including from Netanyahu’s own Likud party, have expressed significant reservations regarding the budget, noting the deep cuts to everything from education to transportation.

In a letter to Netanyahu on Sunday, Communications Minister Shlomo Karhi (Likud) warned that the budget cuts could harm the nation’s communications infrastructure in a way that could potentially “endanger lives.”

Both Diaspora Affairs Minister Amichai Chikli (Likud) and Interior Minister Moshe Arbel (Shas) also wrote to Netanyahu regarding the budget.

Chikli, who recently stepped down as social equality minister and has called for a reduction in the number of ministries, stated that, while he agrees that “the need for cuts in light of war expenditures is obvious to everyone,” he opposes cutting funding to the Arab sector, a call also taken up by Culture and Sports Minister Zohar during Sunday’s cabinet meeting.

For his part, Arbel argued that the government can “expand without cutting,” calling on Netanyahu to increase the national debt rather than slash budgets for public services.

Both National Security Minister Itamar Ben Gvir (Otzma Yehudit) and Transportation Minister Miri Regev (Likud) have also expressed opposition, Israel Hayom reported, quoting them as warning that the new budget would freeze police recruitment and harm the nation’s public transport infrastructure.

Ben Gvir said he would “vote against or at the very least… abstain from [voting on] this budget,” the daily reported.

Environmental Protection Minister Idit Silman has also protested the cuts, which she said could cause “severe environmental harm.”

The revised budget has come under intense criticism from the Federation of Local Authorities, which on Friday urged Netanyahu and Finance Minister Smotrich not to enact the spending cuts.

IDF troops operate in Gaza in a handout image cleared for publication on January 12, 2024. (Israel Defense Forces)

In the letter, the heads of 257 local government authorities from all sectors warned that the proposed spending cuts to revise the 2024 budget present a “fatal blow to the citizens of the State of Israel and the ability of local government to provide services to residents.”

In the letter, local authorities strongly opposed deep cuts to the Education and Welfare and Social Affairs Ministries’ budgets, which they argued would lead to the closure of classrooms, deepen social gaps, and severely impact programs geared towards survivors of Hamas’s October 7 massacres.

The government’s proposed budget cuts would constitute a “death blow to social services in 2024,” one Social Affairs Ministry official told the Haaretz daily.

Putting Israel’s finances on a war footing

In an open letter to his fellow ministers published on the Israel National News site on Sunday morning, Finance Minister Smotrich cautioned that “there are no free meals” and that “the war requires a temporary change of priorities and the postponement of other important things.”

“I understand your anger toward me in the last few days,” he wrote, arguing that “free[ing] up budgets for the war effort… is the meaning of national responsibility.”

On October 7, thousands of Hamas-led terrorists burst across the border into Israel from Gaza and killed some 1,200 people, the large majority of whom were civilians, while also committing severe atrocities including rape, torture, and other crimes.

They took hostage some 240 people, of whom 132 remain in captivity, although not all of them are alive. Israel subsequently declared war on Gaza with the goal of eliminating Hamas and its capability to threaten Israel’s security, and releasing the hostages.

While Knesset lawmakers okayed state budgets for 2023 and 2024 — totaling nearly NIS 998 billion ($270 billion) — last May, the outbreak of war in October upended the government’s fiscal plans, forcing legislators to pass a NIS 28.9 billion ($7.85 billion) supplementary budget for 2023 in December, in order to cover the costs of the ongoing fighting with Hamas and Hezbollah, as well as civilian expenses, such as accommodation for evacuees from the north and south.

But controversially, the amended 2023 budget also included hundreds of millions of shekels in coalition funds, which professionals in the Finance Ministry said should have been halved.

The war with the Hamas terror group is reportedly costing Israel at least NIS 1 billion ($269 million) per day.

View of the destruction caused by Hamas terrorists on October 7, 2023, in Kibbutz Kfar Aza, near the Israeli-Gaza border, November 2, 2023. (Arie Leib Abrams/Flash90)

Israel has spent billions of shekels on arms procurement and payments for IDF reservists, housing evacuees, and measures to bolster civilian security arrangements inside Israel.

Among these initiatives are NIS 18 billion ($4.9 billion) outline to rehabilitate and develop Gaza border communities and a NIS 9 billion ($2.5 billion) wartime assistance program for the hundreds of thousands of IDF reserve soldiers mobilized in the wake of Hamas’s brutal attack on October 7.

Regardless of what is decided in the cabinet, there will likely be modifications to the budget once it makes its way to the Knesset, predicted senior Likud MK Danny Danon.

“I think there will be changes and the government will have to show the public that it is not only asking the public to take part in the effort but also that the government is making the proper changes,” he said, predicting that the issue of extraneous ministries will continue to be a part of the political debate going forward.

Times of Israel staff contributed to this report.

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