Besalel – the part that is shmad is the fact that the government is trying to take care that the idea of someone devoting their life completely to torah in the kosalei beis medrash should be obliterated (reminiscent of the yevanim – you can “keep torah” as an intellectual pursuit as long as its translated etc, as long as the yidden take part in “sports”, etc) – just not to be an exclusively kadosh Jew
(I’m not saying that a person who works can’t be mekadeish everything he does, though admittedly the outside world makes that more and more challenging – BUT as far as I understand it, THAT is the concept that they are trying to fight and arguing that they are trying to “shmad” that kind of Yid – and they’re probably right. Lapid and his cohorts have said so blatantly and then follow up with “and its better for them too” (when who knows if they’re trying to force their value system on us, or really as some suggest, are trying to make sure they won’t be outnumbered in elections in the near future…) )