At the highest executive level, the traffic light is fighting over the budget for the coming year. Will the debt brake hold? Will major projects be canceled? All partners will probably have to swallow bitter pills.
With every hour without an agreement, the pressure on the leaders of the traffic light government to plug the billion-dollar hole in the budget grows. If she wants to decide on the budget for the coming year, a solution will have to be found in the next few hours.
Chancellor Olaf Scholz (SPD), Finance Minister Christian Lindner (FDP) and Vice Chancellor Robert Habeck (Greens) are doing everything they can to “enable us to adopt the 2024 budget as soon as possible,” said Foreign Minister Annalena Baerbock (Greens). However, she left it open whether key data will be available by the cabinet meeting.
According to Lindner, around 17 billion euros are missing from the federal budget for the coming year following the Federal Constitutional Court’s ruling three weeks ago. The highest German court had declared the reallocation of 60 billion euros to be null and void. The money was approved as a Corona loan, but was later to be used for investments in climate protection and the modernization of the economy. The judges also decided that the federal government may not set aside loans approved in emergency situations for later years.
Since then, the coalition partners of the SPD, Greens and FDP have been fighting over the budget for 2024. What else can money be spent on? Where are cuts being made? Or can the problem be solved with new loans? There is great uncertainty in the economy and among social associations about what will happen to funding programs and promised funds.
Baerbock warned: “At a time when crises are breaking out one after the other, we as strong democracies must show that we are able to act to the maximum even in times of crisis.” At the moment, everything from a breakthrough to a veritable government crisis still seems possible. Possible scenarios:
Agreement on austerity
FDP leader Lindner would like to scrape together the money through strict austerity measures. He names three cost blocks: social issues, including citizens’ money, international financial aid and unspecified funding programs. The FDP believes that the planned increase in citizens’ money must be reconsidered in view of the development of inflation.
Social Minister Hubertus Heil rejected these demands. The SPD politician explained that it was “morally irresponsible and incompatible with the constitution” to deny those affected an adjustment of the standard rates. Government spokesman Steffen Hebestreit also said: “I don’t know that there are any plans within the federal government to change the legal basis.”
The SPD and the Greens are also against it. “The costs of food, energy, school supplies and everyday needs have risen significantly in recent years,” said Green Party leader Ricarda Lang to the German Press Agency. Therefore the increase is still correct.
The Greens, on the other hand, want to save on climate-damaging subsidies. The Federal Environment Agency advocated in the “Handelsblatt” for restrictions on the so-called diesel privilege and the commuter allowance as well as for the abolition of the company car privilege, which critics believe promotes the sale of large combustion cars and benefits upper income groups. But the FDP is unlikely to join in here.
Conclusion: It seems unlikely that the traffic light government will agree on enough small-scale savings projects to scrape together the missing billions. Likewise, the foregoing of large prestige projects.
Agreement on new emergency loans
The SPD and the Greens advocate suspending the debt brake next year and taking out more loans. For this to happen, the Bundestag would have to declare an emergency. One reason for this could be the war in Ukraine – so that at least direct support could be put before the debt brake.
Lindner is not yet convinced of this, also because he fears that the federal government will end up in court again. A lawsuit by the Union would be very likely.
Experts also consider a renewed suspension of the debt brake to be at least risky. The legal scholar Hanno Kube said in a hearing of the budget committee that the requirements for an emergency resolution increased the longer the situation lasted. Budget legislators can prepare for longer-term situations. Over time, financing will become a regular state task.
Conclusion: It is unlikely that the FDP will agree to suspending the debt brake – without a round of austerity measures.
Habeck consultants see a need for reform in budget policy
Advisors to Federal Economics Minister Robert Habeck (Greens) are warning of dramatically increasing pressure on public finances due to the aging of society. At the same time, digitization and climate-friendly conversion, among other things, have to be managed, writes the scientific advisory board at the ministry in a report. The Advisory Board is a committee of scientists who provide independent advice to the minister.
The advisory board assumes that in 2040, significantly more than half of the federal budget will have to be spent on pensions alone. At the same time, money must also be spent on important areas such as defense and foreign policy as well as infrastructure. The scientists advocate a far-reaching reform of the debt brake.
Mixed solution with bitter pills for everyone
The currently most likely variant is a mixed solution in which every coalition partner would have to swallow a bitter pill. Only direct support for Ukraine could be subject to the debt brake with an emergency resolution.
At the same time, there could be cuts in the increase in citizens’ allowance, which is particularly important to the SPD. Of the Greens’ projects, one could approach Family Minister Lisa Paus’s basic child welfare plan from 2025. Lindner has already emphasized that the plans for 2024 and 2025 must be viewed in one piece.
The tight schedule
The traffic light coalition would ideally like to finalize the budget before the end of the year. The cabinet would then have to approve it on Wednesday in the regular meeting or later in the so-called circulation procedure. Then everything would go to the budget committee.
He needs several days to deal with the documents, so he wouldn’t complete his cleanup session until next week. The Bundestag could then meet in the week before Christmas for a special budget week and make a final decision. The Federal Council could then give the green light around December 22nd.
It is also being discussed that a political agreement will be reached before Christmas – but then the Bundestag will not vote until January. Scholz could probably live with that too. The budget committee could possibly fix the budget at least in a reconciliation meeting.
Postponed to 2024
This is also a variant that Lindner and the FDP in particular could live well with. A provisional budget would then apply at the beginning of January and only necessary expenses would be permitted. But the situation could grow into a real government crisis if there is no longer any pressure to unify.
Then it would also be conceivable that one of the partners would lose his nerve and want to get out. But this is not currently expected, as given the current poll numbers none of the three parties would benefit from a collapse of the coalition.
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.
