After budget ruling: Scholz wants to reassure the population
Following the Karlsruhe budget ruling, Chancellor Olaf Scholz (SPD) has assured citizens that he will make quick decisions on how to proceed financially. At the same time, he tried to dispel fears in a video message on Friday that aid promised by the state, such as to curb high energy prices or to remedy the consequences of the devastating Ahr floods, was now on the brink of collapse.
However, Federal Minister of Finance Christian Lindner announced that the state brakes on gas and electricity prices will now expire at the end of the year after all.
The economic stabilization fund will be closed on 31 December, said the FDP chairman on Deutschlandfunk radio. "This means that no more payments will be made from it next year. Electricity and gas price brakes will expire. These will also have to be terminated on December 31." Just one day after the ruling, the Bundestag decided to extend the brakes until March 31. In the midst of the budget crisis, Lindner also decided to temporarily retire his State Budget Secretary Werner Gatzer at the end of the year. He will be succeeded by Wolf Reuter, the head of the policy department in the finance ministry, according to a statement.
Gatzer is regarded as the architect of the budgets over many years and was already in the department under Finance Ministers Wolfgang Schäuble (CDU) and Scholz. The Ministry of Finance announced the following about his successor: "Financial policy is facing major challenges that need to be addressed in terms of both fiscal and economic policy." Reuter has the best qualifications for this.
Scholz: Revise the budget with care
Chancellor Scholz said in his video message: "The Constitutional Court has stated that aid is still possible in such special emergencies." That is the most important news. He also mentioned aid to protect jobs and companies, as was granted during the coronavirus pandemic. "We will carefully revise next year's budget in light of the ruling. Quickly but with the necessary care," emphasized Scholz. He referred to his government statement in the German Bundestag planned for Tuesday and said that necessary decisions should not be put on the back burner.
The Federal Government is guided by clear objectives and is continuing to pursue them. "Firstly, we want to mitigate the consequences of the Russian war of aggression against Ukraine and its impact on our country," said Scholz. In second and third place, he mentioned support for Ukraine and strengthening cohesion in Germany. "Fourthly, we want to continue to modernize our country so that we continue to have a strong industry, good jobs and good wages in the future if we are to operate in a climate-neutral way." And fifthly, the Federal Government wants Germany to become faster and more digital.
The Federal Constitutional Court's budget ruling concerns money that had been approved as a coronavirus loan but was subsequently to be used for climate protection and the modernization of the economy. The amount in question is 60 billion euros. The judges declared this procedure unconstitutional. At the same time, they ruled that the state was not allowed to reserve emergency loans for later years. As a result, further billions for future projects are at risk.
Demand for an exception to the debt brake
It is questionable how this financial hole is to be filled. The traffic light coalition wants to use the debt brake exemption for this year. The SPD and the Greens are calling for this step to be taken next year as well and for the debt brake to be reformed as a whole. The effects of the "many crises piling up" will also be felt in the coming year, SPD chairwoman Saskia Esken told the German Press Agency. "It is therefore obvious that we need to adopt the exemption from the debt brake for 2024 at an early stage."
However, a reform is not currently on the agenda for the federal government, as government spokesperson Steffen Hebestreit made clear on Friday. "It is not on the agenda at the moment." The focus is now on drawing up the 2024 budget.
The Chancellor has already pointed out on several occasions that a two-thirds majority in the Bundestag is required to reform the debt brake, his spokesperson explained. "And the parliamentary groups supporting the government have stated in their coalition negotiations that there is no majority for a change and therefore this is not a plan of the federal government at the moment."
The Basic Law would have to be amended to reform the debt brake. This requires a two-thirds majority in the Bundestag and Bundesrat.
At state level, there is certainly sympathy for such a reform. The CDU Minister Presidents of Saxony-Anhalt and Saxony, Reiner Haseloff and Michael Kretschmer, are open to the idea. "The debt brake must remain," Haseloff told Stern magazine. "But for very important future investments in the economy, technology and science, constitutionally compliant ways must be found to realize them."
Kretschmer told the "Frankfurter Allgemeine Sonntagszeitung" newspaper that if the federal government is prepared to implement a real austerity course, the CDU/CSU will support this. At the end of a joint process, there could be a pact for Germany - "and perhaps a discussion about a change to the debt brake". Such an austerity course would have to include not increasing social spending any further.
The SPD Minister Presidents Stephan Weil (Lower Saxony), Malu Dreyer (Rhineland-Palatinate) and Anke Rehlinger (Saarland) are also not averse to a reform. The question arises as to whether the debt brake does not inhibit investment in the future, said Dreyer in Berlin. "The debt brake must not be a brake on the future or on investment," emphasized Rehlinger.
- Despite the Federal Government's announcement that the energy price brakes will expire at the end of the year, Chancellor Olaf Scholz stated in his video message that they will carefully revise the budget for next year, taking into account the ruling, to ensure necessary aid for high energy prices and other emergency situations.
- The Household sector might be affected by the potential financial hole resulting from the Constitutional Court's ruling, as the traffic light coalition considers using the debt brake exemption to fill this gap, a decision that would require a two-thirds majority in the Bundestag and Bundesrat.
- Federal Government's efforts to modernize the country and become climate-neutral could also be impacted by the budget crisis and the potential restrictions imposed by the debt brake. Olaf Scholz, alongside his Finance Minister and allies, will need to strike a balance between fiscal responsibility and providing necessary aid, including easing the burden of high energy prices for households and businesses.
Source: www.dpa.com
