Bundestag suspends debt brake for financial year 2023

Finances - Bundestag suspends debt brake for financial year 2023

The Bundestag has approved an exception to the debt brake for the 2023 financial year. This is Parliament's response to the Karlsruhe budget ruling and legally safeguards loans that have already been taken out.

Much criticism

The CDU/CSU had previously expressed constitutional concerns with regard to the supplementary budget of the traffic light 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 constitutional concerns remain about their supplementary budget today."

The supplementary budget is to be adopted 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.

Coalition defends supplementary budget and traffic light compromise

The parliamentary groups in the coalition government have defended the supplementary budget for the current year and the compromise on the 2024 budget. "With the supplementary budget, we are now implementing the ruling of the Federal Constitutional Court for 2023," said Green Party budget officer Sven-Christian Kindler in the Bundestag. FDP budget officer Otto Fricke said: "This is budgetary policy as it should be." With a view to the 2024 budget, he spoke of a sensible compromise by the coalition.

The supplementary budget is a consequence of the ruling by the Federal Constitutional Court. Germany's highest court had ruled that the federal government may not reserve emergency loans for later years. However, this is exactly what the traffic light government had done with the energy price brakes and flood aid. Parliament now wants to put the budget on a legally secure footing.

The prerequisite is that Parliament declares an emergency and thus suspends the debt brake enshrined in the Basic Law. "If there is a war on the European continent, if a person like Vladimir Putin thinks he can put his power interests above the integrity of states on the European continent, then that is never a normal situation," argued SPD budget officer Dennis Rohde.

Debt brake: reform commission called for

Baden-Württemberg's Finance Minister Daniel Bayaz (Greens) and Berlin's Finance Senator Stefan Evers (CDU), meanwhile, 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 CDU/CSU has raised constitutional concerns about the supplementary budget of the traffic light government for the current year, citing an incorrect accounting system in parts of the budget.
2. The CDU politician Mathias Middelberg criticized the agreement reached by the traffic light coalition for the 2024 financial year, calling it a "not good compromise" and a "rescue package."
3. The CDU/CSU is in favor of implementing the climate money outlined in the coalition agreement, which they believe would be a decisive step towards social equalization.
4. Green Party budget officer Sven-Christian Kindler defended the supplementary budget for the current year, saying it allows the federal government to comply with the ruling of the Federal Constitutional Court.
5. The supplementary budget for the current year and the 2024 budget compromise have been defended by the parliamentary groups in the coalition government.
6. The Federal Audit Office also considers the supplementary budget unconstitutional and has concerns about when loans are counted towards the debt brake.
7. The supplementary budget is a result of the ruling by the Federal Constitutional Court, which stated that the federal government may not reserve emergency loans for later years.
8. Baden-Württemberg's Finance Minister Daniel Bayaz and Berlin's Finance Senator Stefan Evers are advocating for a reform commission for the debt brake to further develop and improve the rule.
9. The debt brake is being criticized following the budget chaos at the federal level, and there are talks among the federal states of launching a reform initiative in the Bundesrat.

Source: www.stern.de