The federal government’s budget policy is being put to the test: What is still possible and what is no longer possible after the ruling from Karlsruhe? The debt brake is moving into the focus of the debate.
After the Federal Constitutional Court’s budget ruling, SPD party leader Saskia Esken advocates not applying the debt brake for this year and next year due to an emergency. “Since we find ourselves in a continuing crisis situation due to external influences, I continue to advocate suspending the debt brake for 2023 and 2024,” Esken told the newspapers of the Funke media group.
A suspension would temporarily create more scope for government spending, which was restricted in the past by the Karlsruhe ruling with regard to so-called shadow budgets. Esken emphasized that at the same time the challenges of climate change, digitalization and demographic change would make a general reform of the debt brake “inevitable”.
Support from the DGB
Esken received support from the German Federation of Trade Unions (DGB) and the head of the business community, Monika Schnitzer. “In the short term, the federal government must suspend the debt brake again. There is a good reason for this, because the effects of the energy crisis are far from over,” said DGB board member Stefan Körzell to the “Rheinische Post”. The Karlsruhe ruling shows that the debt brake is more inflexible than expected – a fundamental reform is therefore necessary and investments must be excluded in the future.
Schnitzer, chairwoman of the Council of Experts for the Assessment of Overall Economic Development, agreed with this view in the newspaper, but emphasized: “However, it seems unlikely that an agreement will be reached on a reform of the debt brake in this legislative period.” The FDP, which co-governs, is particularly seen as an advocate of the debt brake in its current form.
“It is clear that we will not allow any savings in climate protection and its socially just design or in the welfare state,” said Esken, who wants to run for another two years at the head of the Social Democrats together with Lars Klingbeil at the party conference in December. She also renewed the SPD’s demand to ensure additional income through higher taxes for top earners.
Merz blames Scholz and Lindner
On Wednesday, the Federal Constitutional Court declared a reallocation of loans worth 60 billion euros in the 2021 budget to be null and void. They were approved to deal with the Corona crisis, but should be used for climate protection and the modernization of the economy. It is unclear whether the ruling could have additional consequences for the handling of debt-financed special funds at the federal and state levels.
The CDU chairman Friedrich Merz holds Chancellor Olaf Scholz (SPD) and Finance Minister Christian Lindner (FDP) personally responsible for the failure of the 60 billion euro transformation fund.
“The responsible Federal Finance Minister Christian Lindner is responsible for the federal budget,” said Merz to the news portal t-online. “The overall political responsibility for the work of the federal government lies with the Chancellor, who also invented the structure with the unconstitutional transfer of debt from the Corona Fund.”
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