Coalition: New Lindner paper could fuel traffic light dispute

A new policy paper from Finance Minister and FDP leader Christian Lindner on a realignment of economic policy threatens to further inflame the traffic light dispute. As an immediate measure, the paper calls for the final abolition of the solidarity surcharge, even for high earners, an immediate stop to all new regulations and a change of course in climate policy.

“Germany needs a realignment of its economic policy,” it said. This should be of a fundamental nature. The paper is entitled “Economic Turnaround in Germany – Concept for More Growth and Intergenerational Justice.” It is available to the German Press Agency. “Stern” first reported on it.

The undated paper calls for an “economic turnaround” with a “partly fundamental revision of key political decisions” in order to avert damage to Germany as a business location. The German economy is in a growth crisis. A realignment of economic policy could strengthen the confidence of companies and private households.

Autumn of decisions

The FDP has been calling for an “economic turnaround” for a long time and has declared the “autumn of decisions”. Demands such as a complete abolition of solidarity are also generally known. But the timing of the new paper is explosive.

Just a week and a half ago, Economics Minister Robert Habeck (Greens) once again proposed a billion-dollar, debt-financed sovereign wealth fund to promote investments by companies. The FDP rejects this, citing the debt brake.

Chancellor Olaf Scholz (SPD) had invited people to an industrial summit, but neither Habeck nor Lindner were invited. The FDP parliamentary group had organized a kind of counter-summit with associations. Scholz – like the FDP – is planning further meetings in roughly the same format as before. In the end, the Chancellor wants to reach a pact for the industry, the result should be available before Christmas, as government spokesman Steffen Hebestreit announced.

The federal government only announced a “growth initiative” in July. However, the package with many measures has not yet been implemented.

Various measures required

Specifically, Lindner’s current paper talks about an immediate moratorium to stop all new regulations. New legislative proposals should either be eliminated entirely or, where this is not possible, designed in such a way that bureaucracy and regulation are reduced as a result of the project and in no way increased. In this context, for example, plans by Labor Minister Hubertus Heil (SPD) for a collective bargaining law and the supply chain law are mentioned.

It goes on to say that, as an immediate measure, the solidarity surcharge, which is mainly paid by companies, self-employed people, freelancers and highly qualified people, should be abolished. In a first step, it should be reduced by 2.5 percentage points to 3 percent in 2025. In a second step, it could then be eliminated completely in 2027. The solidarity has already been abolished for 90 percent of taxpayers.

The paper also states that national climate targets must be replaced by European climate targets. “It does not help climate protection if Germany, as a supposed global pioneer, tries to make its economy climate-neutral as quickly as possible and consequently with avoidable economic damage and political upheavals.” At the European level, Germany should in particular enforce the abolition of regulations on energy efficiency, building energy efficiency and fleet limits for car companies.

If the national and European goals are aligned, federal funding for efficient buildings and federal funding for efficient heating networks could be reduced or extended, the paper says. In the Building Energy Act – often referred to as the Heating Act – the point in time from which heating systems must be completely climate-neutral can be postponed by five years, with the share of renewable energies initially reduced from 65 percent in new heating systems and only increased later. The climate protection agreements funding program could also be largely eliminated – this is one of Habeck’s measures.

The so-called adjustment meeting of the Budget Committee, which is planned for November 14th, is considered groundbreaking for the continued existence of the coalition made up of the SPD, Greens and FDP. The 2025 budget will be decided there.

Government spokesman Hebestreit rejected speculation about a premature dissolution of the traffic light coalition on Friday afternoon – before the new Lindner paper was announced. “I don’t have the impression that anyone is about to get into trouble,” said Hebestreit in Berlin. He made it clear “that we will work together constructively for the next eleven months until the regular election date for the next federal election.”

In view of the existing billion-dollar gaps in the draft budget, Lindner’s paper speaks of the need for a further reduction in spending.

The government’s draft federal budget for 2025 and the financial plan up to 2028 take steps to “quantitatively normalize and qualitatively improve the federal budget.” In view of the lowered economic forecast and the murkier tax estimate, it is said that these steps are not sufficient.

The paper states that the increased scope for debt through the adjustment of the so-called economic component of the debt brake must be used exclusively to compensate for the shortfall in revenue.

Against subsidies for Intel

The planned subsidy for Intel should not only be postponed, but should be eliminated entirely, the paper says. The previously committed funds totaling 10 billion euros could be taken from the climate and transformation fund – this is a special federal fund. The ailing chip company Intel had postponed the construction of a factory in Magdeburg.

Migration policy and citizens’ money

The paper talks about a “turnaround in asylum and labor market policy”. Due to a lower number of initial asylum applications, payments to states and municipalities for federal support were lower.

The standard citizen’s benefit rates increased disproportionately in 2024. “In 2025 they will continue to be above requirements and should therefore be reduced by abolishing the existing regulation in order to strengthen work incentives.” The paper also states that deductions for early retirement should be adjusted.

New Lambsdorff paper?

Observers in political Berlin drew comparisons to a concept developed by the then Economics Minister Otto Graf Lambsdorff (FDP) in the social-liberal coalition under Chancellor Helmut Schmidt (SPD). The 1982 paper made a series of proposals for “overcoming weak growth and combating unemployment” – and has gone down in history as the “divorce letter”. A few days later, on October 1, 1982, Helmut Kohl (CDU) was elected as the new Federal Chancellor with a constructive vote of no confidence.

The CSU’s financial and budgetary policy spokesman in the Bundestag, Sebastian Brehm, called Lindner’s policy paper “an expression of naked desperation over a hopeless financial situation and a disastrous situation for his party.” However, Lindner and the FDP are part of and co-caused by the problems that are tormenting the country.