Traffic lights in a crisis: Why the government is threatened with a week of chaos

At the SPD, the week in which the fate of the traffic light and perhaps that of the Western world will be decided begins with a meeting of the party leadership with the German Bishops’ Conference. A completely normal appointment, according to the Willy Brandt House. But perhaps now that everything is in decline, only divine assistance can really help.

Last Friday shook the coalition. From the abolition of solidarity to more flexible retirement to the end of the vested rights regulation for citizens’ money, the FDP leader has put together measures that are unacceptable for his two coalition partners. There is talk of a provocation. The coalition has been heading towards this moment for months.

Whether with paper or without: This week, the conflicts that have been unresolved over the past few months are converging like a funnel. It was not for nothing that SPD party leader Lars Klingbeil called it the “week of decision” on Sunday evening.

It is often said that you cannot plan a coalition break. Maybe it doesn’t need that at all. Maybe the many loose ends are enough, maybe that’s enough: a moment of chaos. Whoever flinches loses.

You have to go back in time a bit to understand the current concentration of topics. On July 17, 2024, the federal government will decide on a 49-point plan so that the weakening economy can recover: the so-called growth initiative.

Some of the points were implemented straight away, others now have to go to parliament: such as the research allowance for companies, the promised dismantling of cold progression, funding for electric cars, tightening of citizens’ money. The FDP parliamentary group in particular insists that the growth initiative is the basis for the next federal budget.

But, as is often the case, there is a need for political advice within the parliamentary groups. Example of citizen’s money: The Greens still saw a need for advice here anyway. Green labor market politician Frank Bsirske recently said that one cannot threaten virtually all recipients of citizens’ benefit with sanctions and oblige them to submit monthly reports to the job center. The FDP, on the other hand, as Christian Lindner’s catalog of demands now states, suddenly wants to go much further: Lindner wants to fundamentally reduce the standard rates for citizens’ money. This is considered virtually non-negotiable by the SPD and the Greens.

The Chancellor himself recently caused additional trouble. He invited top business representatives to the Chancellery without consulting the FDP and the Greens. Economics Minister Robert Habeck (Greens) then published his own (also unspoken) plan to rescue the industry, and the FDP parliamentary group even organized a counter-summit on the same day.

As is now clear, the Liberals want to move away from ever more subsidies for industry and instead focus on tax cuts, better depreciation and less bureaucracy. Scholz and Habeck are still on the move with the big bag of money. As Lindner calls it, there is a real directional decision to be made.

However, time is of the essence. If the coalition wants to stick to the federal budget schedule, contentious issues from the growth initiative must be resolved this week so that they can be discussed and passed in parliament next week. Even if the budget resolution is postponed again in mid-November, there will only be around two weeks left to approve the budget before Christmas.

Normally, the government presents its draft budget to parliament for the final touches, leaving MPs some room for adjustments. But what is normal in this coalition?

The federal government has presented MPs with a draft budget that would probably not be constitutional in this form – at least there are considerable doubts about that. Because the government has planned so that a double-digit billion sum from the budget should not be spent, so-called global underspending. The MPs still have to reduce these significantly.

What makes matters worse is that the economic situation has continued to deteriorate. The Federal Ministry of Finance apparently assumes that the state will earn less as a result of more than 13 billion euros. This sum is now missing from the budget. But because Intel has put the construction of its chip factory in Magdeburg on hold, ten billion euros in funding that had already been planned will be released.

According to Federal Finance Minister Christian Lindner, this could plug major budget holes. Chancellor Olaf Scholz would rather use some of the money to reduce electricity prices. Ironically, the Federal Minister of Finance proposed further political measures in his paper, such as the abolition of solidarity, which would increase the budget gap to more than 26 billion euros.

The problem with planning: The federal government and parliament now have to decide on political measures to promote the economy almost simultaneously, which will have an impact on a federal budget that is already missing a lot of money. This makes the negotiations resemble a game of Mikado: Little by little, the right conflicts have to be resolved in the right places without creating new ones elsewhere (e.g. in the household).

The three parties hardly dare to move forward: although Lindner published an overview of the shortfalls (and his suggestions to compensate for them) on Friday, the numbers are decreasing star-Information but questioned by the coalition partners.

Chancellor Olaf Scholz therefore invited Habeck and Lindner to several crisis meetings before the coalition committee on Wednesday. On this day, leading traffic light politicians expect, a decision will be made about the continued existence of the coalition. The FDP meets on Monday for a presidium meeting. It is expected that the Liberals will support their party leader there.

The Chancellor met with the SPD leadership on Sunday evening. Scholz apparently didn’t want to wait any longer for the board meeting on Monday morning. Perhaps the presence of the bishops bothered him after all. In the evening he also received Lindner for a one-on-one conversation.

The coalition is threatened with the next pension debate. The pension package has long since been decided by the cabinet, but the Liberals in Parliament are pushing for changes. For the SPD, a failure of the package would mean the end of the coalition, as even the Chancellor recently emphasized. It was originally supposed to be decided at the same time as the budget, but the Social Democrats have now agreed to a decision before Christmas.

Will it work until then? That is unclear. FDP Vice President Johannes Vogel recently described the package as “not capable of approval”. The liberal veto could ultimately be an advantage for the SPD: If Scholz were to actually ask the vote of confidence in the Bundestag, he would probably have to link it to a specific issue: That could be pensions, leading Social Democrats suspect.

As if that wasn’t enough, Christian Lindner is also putting the issue of migration back on the negotiating table. The FDP leader demands that recognized asylum seekers no longer receive citizen’s benefit, but rather receive less money than German citizens. This is likely to be another no-go for the Greens. The party had already disintegrated internally because of the introduction of border controls, and the top of the Green Youth had even resigned. More hardship for refugees? Hardly conceivable.

In the next five days, the leaders of the government and coalition must resolve conflicts that have been pent up for months, sometimes years. Many have their starting point on November 15, 2023, when the Federal Constitutional Court with its ruling deprived the government of the financial basis for cooperation. The traffic light never recovered from that.

The traffic light is now falling to the feet of one’s own political style: Completely independent topics were often politically linked, postponed, and legislative packages once passed in the cabinet were stopped in parliament and discussed again. That’s what parliaments are for, too. But the traffic lights have taken this type of stop-and-go policy to the extreme.

The problems pile up in a way that is almost impossible to resolve. Will a few top-level talks in the Chancellery be enough to save the alliance again? Is it even possible, given the many interconnected problems and sometimes completely contradictory solutions?

In the coalition it is like in the Mikado: If one of the players pulls the wrong stick at the wrong time, the entire structure collapses. And sometimes even a little inattention is enough to cause chaos on the table.