Federal Government - Budget test of nerves: coalition climate stings climate summit
Political Berlin is waiting for white smoke from the Chancellery. For days, Chancellor Olaf Scholz, Vice-Chancellor Robert Habeck and Finance Minister Christian Lindner have been struggling behind closed doors to find ways out of the billion-euro hole in the federal budget.
The mood is Advent-like, as the FDP leader describes it. However, very few people in the Berlin political scene are in a truly contemplative mood. It is a test of nerves, as the Karlsruhe budget ruling calls into question the foundations on which the traffic light coalition is built.
Stop increasing public funding, cut back on climate projects, abolish subsidies or raise taxes after all? No matter what a compromise looks like in the end, at least one of the traffic light partners will probably have to tackle a core issue. But the chief negotiators are not only under pressure in terms of content. With every day that passes without an agreement, it becomes less likely that the budget for the coming year will be passed properly.
Two scenarios - and a super-GAU
Green Party leader Omid Nouripour emphasized that there is a lot at stake. "Everyone wants fundamental decisions to be made as quickly as possible," he said in Berlin. There are now "in-depth talks".
If a decision is to be made before New Year's Eve, a fundamental political decision must be made in the next few hours. Ideally before the cabinet meeting on Wednesday, so that there is still enough time for the parliamentary process. It is also possible that there will be an agreement in principle before Christmas, but the budget will not be passed by parliament until the beginning of 2024. If not even a political agreement in principle is reached before Christmas, a veritable government crisis is looming.
Climate minister forgoes climate summit
Scholz therefore left the World Climate Conference several hours early at the weekend. Now Habeck is also affected: trip to Dubai canceled. If a climate minister does not travel to the climate summit, the situation must be serious. According to the Chancellor's Office, it is currently better to physically sit together at the table. Whether the decision not to travel was a request from the Chancellor or a joint decision by the trio is the subject of differing accounts.
After days of negotiations, there are still too many unanswered questions, at any rate. The climate in the coalition is more important than the climate summit - especially as Foreign Minister Annalena Baerbock is conducting the main negotiations for Germany anyway.
How the pressure to save money arose
However, Habeck is also fighting for investment in climate protection in the Chancellery. The crisis was triggered by the Federal Constitutional Court's ruling just three weeks ago, which declared the reallocation of 60 billion euros to the Climate and Transformation Fund null and void. The money had been approved as a coronavirus loan, but was later 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. All of this is now tearing holes worth billions in the budget for 2024 and in the financing of many modernization and climate protection projects.
Lindner puts the hole in next year's budget at 17 billion euros. This is not only due to the ruling, he said in an interview with "The Pioneer". For example, the planned reduction in electricity tax to relieve the burden on the manufacturing industry would cost three billion euros, while the increased level of basic security would cost six billion euros.
Savings, taxes or debt brake?
The increase in basic income is one of the projects that now appears to be on the back burner. The line was supposed to rise by around 12 percent in the new year - mainly because inflation caused the cost of living to skyrocket. Labor Minister Hubertus Heil (SPD) wants to stick to the plan and called it "morally irresponsible and incompatible with the constitution" to deny those affected the adjustment. The FDP, on the other hand, believes a reassessment is urgently needed because inflation has recently fallen.
The basic agreement that the traffic light coalition must now reach is to save or create revenue, i.e. increase taxes or suspend the debt brake for 2024. Lindner insists on the savings option. The federal government spends 45% of its expenditure on social welfare, said "The Pioneer". "A lot of standards have been created over the last few years." High subsidies are also paid to industry.
Lower Saxony's Minister President Stephan Weil (SPD) surprisingly called for a revision of the Heating Act. "There are many people in our society, for example prime ministers, who are wealthy enough and do not need state subsidies for their new heating system," he told Die Welt.
Coalition in danger? Lindner's red lines
Tax increases or higher debts, on the other hand, are red lines for Lindner - also in terms of continued participation in the coalition. He will not waver on his absolute basic convictions, said the FDP leader. "The guard rails for our participation in government have always been: we respect the debt brake, i.e. the debt level in our country must fall." In addition, the tax burden on citizens must not increase.
Lindner was referring directly to statements made by SPD leader Lars Klingbeil, who said that following the budget ruling, the coalition agreements to adhere to the debt brake and refrain from raising taxes would once again be up for debate. "I can only give the friendly answer to that: This can be discussed in 2025 in the next Bundestag election campaign," said Lindner.
In 2017, the FDP leader unexpectedly broke off talks about a so-called Jamaica coalition with the CDU and the Greens. His sentence "It is better not to govern than to govern wrongly" went down in history. But now Lindner also sees good reasons to remain in the coalition. Without the FDP, only a grand coalition of SPD and CDU/CSU would be conceivable. "And the last grand coalition left us with the many problems with migration, planned climate protection and neglect of the Bundeswehr. I don't think that's the better constellation for the country," he said.
Read also:
- Despite the tense negotiations between Chancellor Olaf Scholz, Vice-Chancellor Robert Habeck, and Finance Minister Christian Lindner, Green Party leader Omid Nouripour emphasized the urgency of making fundamental decisions quickly.
- The Federal Constitutional Court's ruling three weeks ago declared the reallocation of 60 billion euros to the Climate and Transformation Fund null and void, creating a billion-euro hole in the federal budget and threatening the traffic light coalition.
- The FDP, led by Christian Lindner, is pushing for savings and fiscal discipline, while the SPD, led by Lars Klingbeil, has suggested revisiting the coalition agreements on adhering to the debt brake and refraining from raising taxes.
- Robert Habeck, as climate minister, is advocating for investment in climate protection in the Chancellery, a stance at odds with the FDP's push for savings.
- With days passing without an agreement, it becomes less likely that the budget for 2024 will be passed in time, and Germany may miss an opportunity for climate action at the un climate conference.
- Scholz and Habeck left the World Climate Conference early due to the budget crisis, while Habeck's planned trip to Dubai was also canceled, indicating the seriousness of the situation.
- The traffic light coalition, a partnership between the SPD, FDP, and Green Party, is facing its first major test, as the budget crisis threatens to upset the delicate balance between the three parties.
- Inflation and the cost of living are also factors in the budget crisis, with Labor Minister Hubertus Heil advocating for an increase in basic income and the FDP calling for a reassessment of the plan due to falling inflation rates.
- Lower Saxony's Minister President Stephan Weil suggested reforming the Heating Act, which could provide a potential source of savings for the government.
- The budget crisis could have far-reaching implications for Germany's political landscape and climate policies, as the FDP's commitment to fiscal discipline and opposition to raising taxes puts pressure on the other coalition partners.
- The fate of the traffic light coalition and Germany's climate policies hang in the balance, as the coalition partners work to find a compromise and avoid a government crisis over the budget.
Source: www.stern.de
