Where should savings be made – or do we need more income? The traffic light coalition has to fill a billion dollar hole. Negotiations are taking place at the highest level, deep behind the scenes.
Political Berlin is waiting for white smoke from the Chancellery. For days, Chancellor Olaf Scholz, Vice Chancellor Robert Habeck and Finance Minister Christian Lindner have been struggling behind closed doors to find ways out of the billion-dollar hole in the federal budget.
The FDP leader describes the mood as Advent. But very few people in Berlin’s political world really feel contemplative. It is a test of nerves because the Karlsruhe budget judgment calls into question the foundation on which the traffic light coalition is built.
Stop increasing citizens’ money, cut back on climate projects, abolish subsidies or increase taxes? No matter what a compromise looks like in the end, at least one of the traffic light partners will probably have to tackle a core issue. But the chief negotiators are not only under pressure in terms of content. With every day without agreement, proper passage of next year’s budget becomes less likely.
Two scenarios – and a catastrophe
Green Party leader Omid Nouripour emphasized that there is a lot at stake. “Everyone’s wish is that the fundamental decisions are made as quickly as possible,” he said in Berlin. There are now “in-depth discussions”.
If a decision is to be made before New Year’s Eve, a fundamental political decision must be made in the next few hours. Ideally before the cabinet meeting on Wednesday so that there is still enough time for the parliamentary procedure. It is also possible that there will be a fundamental agreement before Christmas, but the budget will not be passed by Parliament until the beginning of 2024. If even a basic political agreement cannot be reached before Christmas, there is a risk of a real government crisis.
Climate minister foregoes climate summit
Scholz therefore left the World Climate Conference several hours earlier at the weekend. Now it also hits Habeck: trip to Dubai canceled. If a climate minister doesn’t go to the climate summit, the situation must be serious. According to the Chancellery, it is currently better to physically sit together at the table. There are different stories about whether the travel waiver was a request from the Chancellor or a joint decision by the trio.
After days of negotiations, there are still too many unanswered questions, or so they say. The climate in the coalition is more important than the climate summit – especially since Foreign Minister Annalena Baerbock is leading the main negotiations for Germany anyway.
How the pressure to save came about
But Habeck is also fighting in the Chancellery, among other things, for investments in climate protection. The trigger for the crisis is the almost three-week-old ruling of the Federal Constitutional Court, which declared the reallocation of 60 billion euros to the climate and transformation fund to be null and void. The money was approved as a Corona loan, but was later to be used for climate protection and the modernization of the economy. At the same time, the judges decided that the state was not allowed to set aside emergency loans for later years. Everything together is now tearing billions in holes in the budget for 2024 and in the financing of many modernization and climate protection projects.
Lindner estimates the hole in the budget for the coming year at 17 billion euros. The reason is not just the verdict, he said in an interview with “The Pioneer”. For example, the planned reduction in electricity tax to relieve the burden on the manufacturing industry will cost three billion euros, and the increased level of basic security will cost six billion euros.
Savings, taxes or debt brake?
The citizen’s allowance increase is one of the projects that now appears to be on the brink. The line was expected to rise by around 12 percent in the new year – mainly because inflation caused the cost of living to skyrocket. Labor Minister Hubertus Heil (SPD) wants to stick to this and called it “morally irresponsible and incompatible with the constitution” to deny those affected the opportunity to adapt. The FDP, on the other hand, believes a reassessment is urgently needed because inflation has recently fallen.
The basic agreement that the traffic light coalition must now reach is to save or create income, i.e. increase taxes or suspend the debt brake for 2024. Lindner insists on the savings option. The federal government uses 45 percent of its spending on social issues, said “The Pioneer”. “A lot of standards have been created over the last few years.” High subsidies would also be paid to industry.
Lower Saxony’s Prime Minister Stephan Weil (SPD) surprisingly called for a revision of the heating law. “There are many people in our society, for example prime ministers, who are wealthy enough and do not need government funding for their new heating system,” he told “Welt”.
Coalition in danger? Lindner’s red lines
Tax increases or higher debts, on the other hand, are red lines for Lindner – also when it comes to further participation in the coalition. The FDP leader said he would not waver when it came to his absolute fundamental beliefs. “The guidelines for our participation in government have always been: We respect the debt brake, i.e. the level of debt in our country must decrease.” In addition, the tax burden on citizens should not increase.
Lindner was directly referring to statements by SPD leader Lars Klingbeil, who said that after the budget verdict, the coalition agreements on compliance with the debt brake and foregoing tax increases would be up for debate again. “I can only give the friendly answer: This can be discussed in the next federal election campaign in 2025,” said Lindner.
In 2017, the FDP leader completely unexpectedly broke off talks about a so-called Jamaica coalition with the CDU and the Greens. His sentence “It is better not to govern than to govern wrongly” went down in history. But now Lindner also sees good reasons to stay in the coalition. Without the FDP, only a grand coalition between the SPD and the Union is conceivable. “And the last grand coalition left us with the many problems with migration, planned economy climate protection, neglect of the Bundeswehr. I don’t think that’s a better situation for the country,” he said.
Source: Stern
I have been working in the news industry for over 6 years, first as a reporter and now as an editor. I have covered politics extensively, and my work has appeared in major newspapers and online news outlets around the world. In addition to my writing, I also contribute regularly to 24 Hours World.
