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Traffic light budget compromise: Scholz considers draft budget for 2025 to be “good budget”

Traffic light budget compromise: Scholz considers draft budget for 2025 to be “good budget”
Traffic light budget compromise: Scholz considers draft budget for 2025 to be “good budget”

The opposition sees the traffic light coalition’s budget compromise as a sham. It does not solve the country’s problems. Chancellor Scholz has a completely different assessment.

Chancellor Olaf Scholz has defended the coalition leaders’ budget compromise against criticism from the opposition. A way has been found to finance both the country’s important tasks and aid for Ukraine “without leading to restrictions here,” said the SPD politician at a citizens’ dialogue in Weimar.

“And that is why it is a good budget that the federal government has agreed on after such a long time and in a sleepless night.” Scholz admitted that the coalition had “struggled hard” to take this path.

In long negotiations on Friday night, the leaders of the coalition settled the budget dispute that had been simmering for months and agreed on a draft for the federal budget for 2025. The debt brake is being adhered to, and a budget emergency has not been identified, for example due to spending on military and humanitarian support for Ukraine – this was important to the FDP.

“Investment budget increases dramatically”

At the start of the Thuringian SPD’s election campaign in Weimar, Scholz stressed that the coalition was doing something for children and families with its draft budget by increasing child benefit and child allowance. In addition, investments would be made in the state’s infrastructure, such as roads and railways. “The federal government’s investment budget is increasing dramatically,” said the Chancellor.

Investments will also be made in state-of-the-art infrastructure for Germany’s internal and external security, said Scholz. The defense budget of around 52 billion euros is only to grow by around 1.2 billion euros, while Minister Boris Pistorius (SPD) had called for more than 6 billion euros. But Scholz stressed that “we are providing the necessary money for the security of our country and that we will therefore also equip the Bundeswehr better than was the case in the past.”

Lindner sees “completely normal budget process”

His cabinet colleague Christian Lindner (FDP) is relaxed about the fact that the defense minister has to make do with much less money than expected. “The defense minister is getting more money than in the previous budget, but he is getting less money than he publicly demanded,” the federal finance minister told “Bild”. “That is the normal budget process.” A minister works passionately for his department and naturally demands the maximum. “The task of the finance minister and the federal government as a whole is then to examine what is desirable and what is really necessary.”

Improvements to defence budget demanded

SPD budget expert Andreas Schwarz called the small increase in the defense budget a “sobering figure.” “The result of the internal government budget talks does not correspond to what we need in the defense sector.” Now the MPs have “the task of making significant improvements in the parliamentary process,” Schwarz told the “Tagesspiegel.”

Following the cabinet decision on the 2025 budget, which is scheduled for July 17, the Bundestag will deal with it for the first time immediately after the summer recess in September. Parliament usually makes its decision in November/December.

The Union also believes that improvements to the defense budget are necessary. “What we need now is a quick, genuine re-prioritization in the budget that will enable a stable and increased defense budget,” CDU security expert Roderich Kiesewetter told the “Augsburger Allgemeine.”

“This will not make us ready for war,” said the president of the Reservists’ Association, Patrick Sensburg, about the small increase in the defense budget next year. “That is disappointing.” The former CDU member of the Bundestag warned the Redaktionsnetzwerk Deutschland (RND): “In fact, there will be gaps everywhere.”

After 2025, the Bundeswehr’s funding will become “increasingly tighter”

The long-term financing of the Bundeswehr beyond 2025 is also likely to lead to heated debates. Chancellor Scholz had spoken of a regular defense budget of 80 billion euros from 2028, i.e. after the special fund has been completely spent. Vice Chancellor Robert Habeck (Greens) made the dimension of the challenge clear in the ARD “Tagesthemen”. “We’ll just about get through 2025. After that, it will get increasingly tight.”

The counter-financing after the expiry of the 100 billion Euro Bundeswehr special fund has not yet been found. “This is significantly greater than our problem of the last two or three days or last night,” stressed the Green politician. “I do not want to see cuts in education, research, culture and social services because of the Federal Republic of Germany’s defense capability.”

Habeck: No further debates about budget emergency

Habeck spoke out against a renewed debate about a budget emergency, for example in the parliamentary process. “That debate has been had. I would not open it up again,” said the Green politician. He spoke of a “very, very good package.”

Juso chairman Philipp Türmer sees things differently. “With many tricks, financial leeway is now being used that the finance minister had ruled out until recently,” Türmer told the portal web.de. Much of it is based on forecasts. If the global situation worsens or crises occur, the budget could quickly become unstable. “That is why suspending the debt brake is still the more sustainable option.”

DGB sees light and shadow

Trade unions and social associations reacted with mixed feelings. DGB head Yasmin Fahimi saw it as “good news” that major cuts and social welfare cuts were apparently not taking place. The trade unions considered the labor policy proposals to be the wrong signal overall.

The chairwoman of the German Social Association (SoVD), Michaela Engelmeier, emphasized in the newspapers of the Funke media group that it seems to have been possible to “prevent further social decline in key areas.” In an interview with RND, however, she also complained that “the major distribution issues will no longer be resolved with this coalition because they cannot agree on the courageous tax reform required for this.”

Union keeps option of early elections on the table

Meanwhile, the Union sees no signal of stability in the traffic light compromise. “It may be that we have to come to Berlin at short notice,” said Union parliamentary group leader Friedrich Merz to the “Rheinische Post”. “The traffic light coalition is not so stable that it will definitely last through the summer.”

Does the growth package really bring growth?

According to the CDU/CSU opposition, the growth package planned by the traffic light coalition together with the budget will not provide a sustainable boost to the German economy. “The alleged growth package is just as weak as the traffic light coalition. Petty tinkering instead of noticeable stimulus for the economy,” explained the economic policy spokeswoman for the CDU/CSU parliamentary group, Julia Klöckner. Important structural reforms for greater competitiveness, such as a cap on non-wage labor costs, more flexible working hours and a corporate tax reform, were missing.

Source: Stern

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