Stopping funding for yeshivas plus eliminating their students' exemption from the national draft is HUGE. The haredim typically have very large families, so they have been growing as a percentage of the population - and as it's one person, one vote, their influence in elections has also been growing. So they have a voting block that mostly cares about their income and safety without consideration of the cost (putting their kids at risk in the armed forces) - and all their education is limited to studying a document created thousands of years ago that they regard as the divine answer to everything. So, a rapidly growing block of voters without a stake, who are *certain* they know all the answers, but don't. What could possibly go wrong?
From my reading on the founding of the state of Israel, this promise of funding and exemption was key to getting buy-in from the haredim, which seemed a reasonable thing to do at the time, but here we are.
I have friends in Israel (Jewish but not Orthodox) who had to leave the country to get married - because they didn't fit the 'official' definition of 'being Jewish'. I expect there are plenty of Israeli citizens who consider this to be the right judicial decision.