Bundestag adopts debt brake and supplementary budget

Finances - Bundestag adopts debt brake and supplementary budget

The Bundestag has started to repair the budget for the current year and at the same time implemented an important part of the traffic light compromise on the 2024 budget. The Bundestag passed a supplementary budget for the current year. Parliament thus put the budget for 2023 on a legally secure footing following the Karlsruhe budget ruling. In a marathon vote, Parliament had previously suspended the debt brake for the 2023 financial year by a clear majority.

This is the Bundestag's response to the Karlsruhe budget ruling and creates the conditions for a supplementary budget, which is also to be voted on today.

Subsequent security for energy price brakes and flood aid

The supplementary budget for 2023 will provide retrospective legal security for loans already taken out for the energy price brakes and for flood aid following the Ahr valley flooding. This involves around 45 billion euros that have already been paid out. Since the ruling, however, it has been clear that the federal government should not have taken out these loans without further ado.

This is because the loans were approved in 2021 and 2022 when the debt brake was suspended due to the coronavirus crisis and the war in Ukraine. The traffic light government had planned to continue using the money in 2023 and 2024. However, the judges in Karlsruhe ruled that the federal government may not set aside emergency loans for later years. Without the supplementary budget, the budget for 2023 would have been in danger of breaching the constitution.

Green Party budget holder Sven-Christian Kindler defended the procedure in the Bundestag. "We are putting the electricity and gas price brakes on a secure legal footing. We are securing the aid in the Ahr valley - that is right and that is important," he said.

Fourth year without a debt brake

The planned new debt now totals 70.61 billion euros, which is 44.8 billion euros above the permissible borrowing limit. The Bundestag suspended the debt brake for the fourth year in a row.

Article 115 of the Basic Law expressly states that additional loans can be taken out - in the event of natural disasters or exceptional emergencies "that are beyond the control of the state and significantly affect the state's financial situation".

The Ampel government argued that the far-reaching humanitarian, social and economic consequences of the war in Ukraine had a negative impact on the state's financial situation. In addition, damage from the flood disaster in summer 2021 had not yet been repaired.

The debt brake enshrined in the Basic Law is controversial because it only gives the federal government a certain amount of leeway for borrowing. A reform demanded by the SPD and the Greens requires a two-thirds majority in both the Bundestag and the Bundesrat. However, the FDP and large sections of the CDU/CSU are opposed to this.

Much criticism

The CDU/CSU had previously expressed constitutional concerns with regard to the supplementary budget of the coalition government for the current year. An incorrect accounting system is still being used in parts of the budget, said parliamentary group deputy leader Mathias Middelberg (CDU) in the Bundestag. "And that is why there are still constitutional concerns about the supplementary budget today."

The Federal Audit Office also considers it unconstitutional. This concerns the question of when loans are counted towards the debt brake: When they are approved or when they are actually taken out.

CDU politician Middelberg also had nothing good to say about the agreement reached by the traffic light coalition for the 2024 financial year. "This is not a good compromise for this country. It is more of an attempt to mend the rift in their traffic light coalition," he said. The agreement is a rescue package for the traffic light government. "Unfortunately, that's all it is."

The main components are "massive tax and duty increases". Among other things, Middelberg called for the introduction of the climate money set out in the coalition agreement. "That would also have been the decisive step towards social equalization," he said. The traffic light coalition had envisaged the climate money as social compensation for increasing climate protection burdens on citizens, but it has not yet been implemented.

Debt brake: reform commission called for

Baden-Württemberg's Finance Minister Daniel Bayaz (Greens) and Berlin's Senator for Finance Stefan Evers (CDU) are campaigning for a reform commission for the debt brake. This should be made up of representatives from the federal and state governments and academia in order to further develop the debt brake, write the two politicians in a guest article published in the "Tagesspiegel".

The two state politicians consider an investment rule as part of the debt brake to be a conceivable part of a possible reform. "This would enable the credit financing of additional investments, for example with a view to the challenges of transformation," they say in the guest article. "A new exception to the debt rule must not lead to new leeway being created for consumptive or non-targeted expenditure by politically charging the concept of investment."

The federal states also need more scope for debt. "A debt level for the federal states of 0.15 percent of their GDP, for example, would open up leeway that could be used for the most important federal state policy issue of education," write the two politicians. They believe that emergency loans should also be able to be used beyond the year in which the emergency begins.

The debt brake is being criticized following the budget chaos at federal level. There is talk among the federal states of launching a reform initiative in the Bundesrat, as Berlin's governing mayor Kai Wegner (CDU) said on RBB-Inforadio.

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1. The Bundestag, led by Mathias Middelberg from the CDU, expressed concerns about the constitutional legitimacy of the supplementary budget.
2. The supplementary budget is crucial for providing legal certainty for loans previously taken out for energy price brakes and flood aid in the Ahr valley.
3. The loans were issued during the suspended debt brake period due to the coronavirus crisis and the war in Ukraine.
4. The tenure of the Ampel government, a Traffic Light Coalition, has been marked by the suspension of the debt brake for the fourth consecutive year.
5. Sven-Christian Kindler, the Green Party's budget holder, defended the procedure, emphasizing the importance of securing energy and flood aid.
6. Stefan Evers, the CDU finance senator in Berlin, and Daniel Bayaz, the Green finance minister in Baden-Württemberg, called for a debt brake reform commission.
7. They proposed an investment rule to enable financing for targeted investments in light of the transformation challenges.
8. The need for increased funding for education in the federal states was also highlighted by the two politicians, advocating for a higher debt ceiling.
9. The Bundesrat, the Federal Council of Germany, is considering a reform initiative to address the critiques of the debt brake following the budget chaos at federal level.
10. The CDU/CSU, led by Mathias Middelberg, criticized the supplementary budget and the agreement for the 2024 financial year as insufficient.
11. They argued that the compromise lacked a proper climate compensation element, an issue that had been overlooked by the Traffic Light Coalition.
12. The CDU/CSU also raised concerns about potential misuse of the "investment rule," advocating for stringent guidelines to preclude non-targeted expenditure.

Source: www.stern.de