An Israeli newspaper warned this week: "The Treasury wants to cancel birth allowances from after the second child." It seems a leaked version of the draft 2009 Adjustments Law includes canceling birth allowances for the third child on, as well as shortening maternity leave from 14 to 12 weeks. The proposal naturally enraged Knesset members who see it undoing the policies they introduced into law. I would like to relate both to the proposal and to its source. First, the source. The naive reader will wonder, Who cares what the Treasury wants? Surely the Treasury is charged with administering the country's budget, not with formulating it? Well, welcome to Israel. Formally, Israel has three branches of government: the Knesset makes the laws, the government carries them out and the courts adjudicate them. However, Israel has a shadow fourth branch of government - the Treasury. The reason is a unique Israeli invention known as the "adjustments law." After our 120 elected representatives work tirelessly over the course of the year to agree on a national budget, the Treasury submits its own shadow budget in the form of the Adjustments Law. The Knesset is given a relatively short time to evaluate the adjustments, and powerful coalition forces are at work to approve them. The Adjustments Law is one of the two important "bypass roads" undermining the separation of powers in Israeli democracy; the second being the entrenched power of the courts to do whatever they want. In a normal democracy, if the government wanted to change the policy regarding birth grants, they would have to do it the hard way: propose a new law with a different policy, move it through the Knesset committees and put it up for a vote. That is how Knesset members Shelly Yecimovich and Gideon Sa'ar advanced their proposal to extend maternity leave from 12 to 14 weeks, ultimately obtaining the incredible support of 95 MKs for the new law. But there is also a bypass road: Treasury bureaucrats can stick this proposal in the Adjustments Law together with everything else on their wish list and compel the Knesset to take it or leave it as a package deal. This policy, together with the penchant of the High Court to casually second-guess the judgment of government ministers, occasionally makes me wonder why I bother to vote, given that the authority of our elected representatives is so easily circumvented. Let us now examine the content of the proposal. First, reducing the birth allowance. As part of the package of social-security benefits, every new mother in Israeli gets a grant of a few hundred shekels. (For the first child it is a bit more.) Is this a "welfare grant," meant to help families make ends meet at a time of unusual budgetary pressure? Or is it a "fertility grant," meant to encourage births? If the first, why isn't it means-tested? If the second, why is it so tiny? I think the answer is clearly the first. Raising a child costs hundreds of thousands of dollars; a few hundred shekels can hardly affect this decision. Furthermore, other government programs, including the monthly child allowance, provide much more money, so even within the constellation of "fertility" allowances, the birth allowance is pretty insignificant. But even a family on an even financial keel (who would be excluded by a means test) can find the expenses surrounding a birth to be a temporary burden; the birth allowance helps the family weather this difficult period. Given this rationale, the distinction between the first and second child and subsequent children seems rather arbitrary. As a fertility policy, it may make sense to encourage large families only up to a certain size. ("More families with children, instead of families with more children.") But as a welfare policy, the needs of a new baby apply equally to every child after the first (the first child involves some unique expenses of durable goods such as carriages and cribs). It is also worth pointing out that out of the approximately 150,000 births each year, less than half are the third child or beyond, and the allowance for these children is already reduced, only a little over NIS 400. So this measure would save only about NIS 30 million a year, out of a total outlay of about NIS 200 billion. If the Adjustments Law has any justification at all, it is as an emergency measure for laws that the Treasury considers ill-considered or simply unaffordable. Laws that were approved by 95 MKs, or those whose cost is less than a 10th of a percent of the budget, would hardly seem to fit these categories. It's good that Treasury officials are interested in saving the country money, but their job is to do so within the framework of the priorities dictated by the Knesset. The suggested changes constitute gratuitous interference with the budget process, meant to reverse policies that clearly enjoy the support of the public. [email protected] Asher Meir is research director at the Business Ethics Center of Jerusalem (www.besr.org), an independent institute in the Jerusalem College of Technology.