Dental Cleaning vs. Root Canal

The social protest movement has sparked a tremendous amount of discussion about the future direction of the country.

By ZIV HELLMAN
Prof. Manuel Trajtenberg DONT USE (photo credit: MIRIAM ALSTER / FLASH 90)
Prof. Manuel Trajtenberg DONT USE
(photo credit: MIRIAM ALSTER / FLASH 90)
So far, Israel’s summer social protest movement has not brought about any substantial social or economic change. What it has done is spark a tremendous amount of discussion about the future direction of the country, both on the streets and at the highest political levels.
In the days leading up to Rosh Hashana, news cycles were inundated with dueling reports issued by competing committees of experts established in direct response to the mass protests, the Trajtenberg committee (on September 26) and the Yonah-Spivak committee (on September 27).
Both committees are staffed by top economists with years of experience in academia, the civil service and the business sector. Based solely on their credentials, in fact, one could imagine members of either committee swapping places with their colleagues on the other committee. Manuel Trajtenberg, chairman of the Trajtenberg committee, is a Tel Aviv University professor of economics with a Harvard PhD and chairman of the Planning and Budgeting Committee of the Council for Higher Education. The Yonah-Spivak committee is led by Yossi Yonah, professor of education at Ben-Gurion University, and Avia Spivak, professor of economics at Ben-Gurion University and former deputy governor of the Bank of Israel.
The two committees, however, represent vastly differing opinions regarding what is to be done. The Trajtenberg committee is the “establishment” committee, commissioned by Prime Minister Benjamin Netanyahu to advise his government as to how to respond to the calls for change emanating from the street protests. It was granted what some observers regarded as an extraordinarily free hand to consider a wide range of possible measures, but was constrained by a demand that its recommendations not lead to an increased state budget deficit.
The Yonah-Spivak committee, in contrast, was not founded as a result of an official commission, but as a group of experts volunteering to assist the heads of the social protest. From the start, it positioned itself as the “contrarian” voice.
Perhaps predictably, the Trajtenberg committee’s recommendations were praised by Netanyahu and Finance Minister Yuval Steinitz, and dismissed as too conservative by the protest movement leaders and left-leaning politicians such as Meretz’s Zahava Galon and the new chairwoman of the Labor Party, Shelly Yacimovich. In response, Trajtenberg accused many of his detractors of failing to read his report.
A close look at the main points of the Trajtenberg committee’s report, however, reveals several points which, if they are eventually adopted by Netanyahu, would constitute an about-face to policies that the Prime Minister has espoused for years. For example, the committee proposed raising taxes almost entirely at the expense of the wealthy. Netanyahu had been pushing for a reduction of corporate tax to as low as 18%; Trajtenberg would raise that tax to 25%-26%. Ditto with respect to capital gains tax, which the committee recommends raising from today›s 20% to 25%-30%.
Trajtenberg’s call for universal state-funded education starting at age three can be read as a critique of the government, because that is already required by law but the government has for years sought political and legal maneuvers to avoid implementing it. The recommendation that the defense budget be cut by 2.5 billion shekels on a permanent basis runs counter to the entrenched positions of the defense establishment.
And these are only a few examples from a report that covers a vast number of subjects, from labor laws and housing reform to anti-trust regulation and even care for the elderly.
That did not stop Spivak from claiming, at a press conference, that the Trajtenberg committee recommendations are not much more than continuation of “existing policy of budget cutbacks… apart from a certain change in taxation there›s nothing [there].”
Indeed, the Yonah-Spivak recommendations go much further than Trajtenberg’s and include expanding mandatory education to cover all ages, down to infants, increasing social security allowances, expanding the state health services budget, constructing public housing at a cost of 3.3 billion shekels and increasing the education budget by 2 billion shekels.
The Yonah-Spivak committee would pay for all these added expenses by large tax increases – hiking the marginal income tax rate to 55%, capital gains tax to 40% and corporate tax to 31% – along with an increased state budget deficit.
It is on this point that perhaps the most fundamental difference in the approaches of the two committees comes to the fore. While the Yonah-Spivak committee sees a potential for Israel to become a social welfare state in the fullest sense if only it can find the willingness to devote its resources to that end, the Trajtenberg committee stresses improving the socio-economic situation as much as possible without a radical transformation of the basic outlines of the Israeli economy.
“We will not become Sweden,” is how Trajtenberg expressed it succinctly. To which Daphne Leef, who sparked the summer protests by pitching the first tent on Rothschild Street in July and became the most public spokesperson of the protest movement, replied metaphorically: “We were expecting root canal work, and all we got was dental cleaning.”