Household - Ampel coalition struggles to find solutions to budget crisis
The traffic light coalition is struggling to find solutions on how to plug the billions in gaps in the federal budget for the coming year following the budget ruling. Decisions could be made in the coming days. Federal Finance Minister Christian Lindner (FDP) specified the areas in which he believes savings are possible. The SPD opposed savings in the social sector.
Why savings must be made
The Federal Constitutional Court had declared the reallocation of 60 billion euros in the 2021 budget to the Climate and Transformation Fund null and void. The money had been approved as a coronavirus loan, but was subsequently to be used for climate protection and the modernization of the economy. At the same time, the judges ruled that the state was not allowed to set aside emergency loans for later years. However, the federal government has done this in special pots - which is now tearing additional holes in the budget. Lindner sees a "need for action" of 17 billion euros for 2024.
Negotiations at top level
SPD leader Lars Klingbeil held out the prospect of difficult talks. These are currently taking place in a three-way round with Chancellor Olaf Scholz (SPD), Vice-Chancellor Robert Habeck (Greens) and Lindner. Talks could take place this weekend. The pressure is high: the coalition must reach an agreement within the next few days if it wants to adopt the budget for 2024 before the end of the year. The SPD party conference will take place in Berlin from December 8 to 10.
"We will have to deal with three major cost blocks," Lindner told the newspapers of the Funke media group. He named the areas of social welfare, including the citizens' income, international financial aid and unspecified funding programs. However, the coalition partner SPD not only wants to talk about savings, but is also putting the agreed waiver of tax increases up for discussion, as Klingbeil made clear.
Focus on social budget
According to Lindner, the federal government currently spends 45 percent of its budget on social welfare. "We will look at how we can become more accurate." For example, the aim is to get people into work more quickly. This would benefit people and also the federal budget.
With regard to the Citizen's Income, the Finance Minister pointed out that the inflation rate is developing much better than forecast when the standard rate was set for 2024. Inflation had fallen to 3.2 percent in November - the planned increase in the Citizen's Income from January is still based on inflation of 9.9 percent, as FDP parliamentary group spokesperson for social policy Pascal Kober had made clear. Lindner said: "In the upcoming review of the gap between wages and social benefits, we will therefore have to look at the adjustment procedure. Because it must always make a noticeable difference whether someone is working or not."
The SPD wants to oppose cuts in the social sector. "Social cuts at the expense of those who have worked their butts off for society is not something we will go along with," said General Secretary Kevin Kühnert at a party conference of the Thuringian Social Democrats in Meiningen on Saturday. "The SPD is fighting to ensure that it is not an austerity budget and that the poorest do not suffer," said Kühnert. The aim remains to get a federal budget for the coming year before Christmas.
Where Lindner still wants to make savings
Germany is ahead in terms of development cooperation and international climate protection funding, said Lindner. "We can stay in first place. But perhaps we can reduce the gap to second place." Lindner also mentioned funding programs. "There are numerous subsidies that need to be questioned as to whether they are actually achieving their goals or have not fallen out of time." However, it is still too early to name individual programs. "Otherwise this will lead to a run on subsidy programs on their last legs." The Greens have spoken out in favor of reducing climate-damaging subsidies. According to Lindner, there should be no cuts to the Bundeswehr in view of the changed threat situation since the Russian invasion of Ukraine.
Another emergency?
An emergency situation is to be declared once again for 2023 and the debt brake suspended as a result, but the CDU/CSU does not intend to stand in the way. Reason: the ongoing energy crisis following the Russian invasion of Ukraine. Klingbeil also wants the same for 2024: "The federal government must make savings. But in the end, I am of the firm political conviction: We have to declare an emergency for 2024 because I don't want to get into a situation where we play off Ukraine aid against climate investment," he said. However, Lindner is very skeptical about this. "I am not yet convinced that a new suspension can be constitutionally justified," he said.
Warning of rising electricity prices
The energy sector is warning of rising electricity prices. Without a federal subsidy for transmission grid fees, end customer prices would rise significantly, said Kerstin Andreae, Chairwoman of the Executive Board of the German Association of Energy and Water Industries (BDEW) to dpa on Saturday. "An affordable electricity supply is of great importance, especially in times of uncertainty - also from a socio-political perspective."
Specifically, the issue is a federal subsidy of up to 5.5 billion euros planned for the coming year to proportionally finance the transmission grid costs. The money was to come from the economic stabilization fund - however, as a result of the budget ruling, the federal government will have to dissolve this special fund at the end of the year. The money for the subsidy would therefore now have to come from the core budget.
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- SPD leader Lars Klingbeil mentioned the potential for difficult negotiations with Chancellor Olaf Scholz, Vice-Chancellor Robert Habeck (Greens), and Finance Minister Christian Lindner (FDP) to reach an agreement on budget savings.
- Klingbeil highlighted the ambitious goal of adopting the budget for 2024 before the end of the year, as the SPD party conference will take place in Berlin from December 8 to 10.
- Lindner identified three significant cost blocks, including social welfare, international financial aid, and unspecified funding programs, as potential areas for budget savings.
- The SPD did not shy away from discussing tax increase waivers, as General Secretary Kevin Kühnert emphasized that the party would not tolerate cuts in the social sector at the expense of those who have contributed to society.
- Lindner suggested that the traffic light coalition could consider reducing funding in development cooperation and international climate protection, mentioning unnecessary subsidies as potential savings opportunities.
- The FDP parliamentary group spokesperson for social policy, Pascal Kober, pointed out that the inflation rate for the Citizens' Income had fallen significantly lower than initially forecast, allowing for potential adjustments to the planned increase for 2024.
- The SPD remains steadfast in its opposition to cutting the social sector, with Kühnert asserting that the party is committed to preventing an austerity budget and protecting the most vulnerable members of society.
- In response to a warning from the energy sector about rising electricity prices, SPD leader Lars Klingbeil advocated for declaring an emergency for 2024 and suspending the debt brake to ensure adequate funding for Ukraine aid and climate investment.
- Lindner expressed skepticism regarding the constitutional justification for another suspension, as the Federal Constitutional Court had previously ruled that emergency loans could not be set aside for later years.
- Kerstin Andreae, Chairwoman of the German Association of Energy and Water Industries, emphasized the importance of maintaining an affordable electricity supply amidst rising prices and the ongoing energy crisis following the Russian invasion of Ukraine.
- Without the planned federal subsidy of up to 5.5 billion euros for transmission grid fees, end customer prices would increase significantly, as German energy and water industries urged the government to address this potential issue.
Source: www.stern.de
