Is the 2025 budget Israel's next social powder keg? - analysis

A 5% across-the-board budget cut for government ministries was the main proposal in a series of budget cuts laid out at a Finance Ministry meeting on the 2025 budget held Wednesday, Globes said sources from the ministry told them.

Other proposed cuts included pay cuts for senior managers in the public sector, postponed raises in the civil service, abolishing unnecessary ministries, and a NIS 2 to 4 billion cut in funds allocated to coalition parties - all amounting to NIS 3.5 billion, according to Globes.

While the total amount of cuts that the ministry makes in order to reduce Israel's deficit is critical to the country's economic recovery; given Israel's political and social climate, the composition of the cuts that are made is also critical.

Unequal treatment

Flat budget cuts across the board for all ministries will likely have significant repercussions for all parts of Israel's society, which could cause widespread frustration if the public does not think that serious cuts to coalition funds, and funds for unnecessary ministries that prop the coalition up are being prioritized over cuts that hurt the entire public.

The recent controversy over the "rabbis bill" and the haredi draft law have highlighted deep discontentment in Israel's society when it comes to the treatment of different sectors of society differently and the equal sharing of national burdens.

The rabbis bill aims to give the government control over appointments of municipal and neighborhood rabbis, instead of the current system where the cities appoint their rabbis.

As pointed out in The Jerusalem Post's editorial on Wednesday, this bill is widely viewed as an attempt by the coalition’s haredi parties to appoint its members to positions and gain influence over issues of religion and state.

Highlighting the sense that this bill is seens as a coalition jobs-grab, Yesh Atid MK Yaron Levi summed up the inequality many felt this bill strengthened. “If the prime minister can approve 1,000 new rabbis, and not 1,000 psychologists, then this place is a piece of trash," he said.

Public protest of the unequal sharing of the security burden has also been coming to a head recently as the haredi draft law is advanced with no real solution in sight.

The IDF says that they need more manpower, the ultra-Orthodox leadership has not made concessions that would allow for a bill that satisfies this need, and the public fury over this inequality grows with every day that the law is not amended and that more IDF soldiers are killed in the Israel-Hamas war and in Israel's northern conflict with Hezbollah.

The 2025 budget may become just another instance of the government's failing balancing act between coalition pressures and demands by the public to meet the needs of the majority of Israelis.

This wouldn't be entirely new. The current government has already been criticized for how sectoral its allocation of funds has been and for failing to address this and cut coalition funds when the war necessitated a rethinking of the 2024 budget.  

“We found in this budget, that to a much larger extent than in previous coalition agreements, coalition resources were very sectoral,” former Bank of Israel Governor Karnit Flug told The Jerusalem Post last month.

“The fact that they didn’t cut coalition expenditures [after the outbreak of the war] that are very sectoral and are not based on professional work substantially undermines the trust in the government. This will make it much harder to come to the public and say ‘look, there is an additional burden that you will have to incur,’” explained Flug.

The Israel-Hamas war has brought the issue of the unequal burden on Israel's different sectors, long kicked down the road, to a head. Given this and the precarious situation of the coalition, Israel's budget could potentially be the next crisis that could topple it, or bring the widespread public protest to new boiling points.

Public trust in the government has been stretched and challenged possibly beyond repair since the outbreak of the war, and also in the year prior during the advancement of the judicial overhaul.

The budget is another opportunity for the government to try to show the public it is prioritizing the needs of the many; or for it to show that coalition demands are the top of its list of priorities.