Concerns about savings pressure - time for budget agreement is running out

Federal Government - Concerns about savings pressure - time for budget agreement is running out

Due to the billions missing from the 2024 federal budget, local authorities, climate activists and the police are worried about cuts. The FDP is insisting on changes to the citizens' income, while the SPD is insisting on the debt brake being suspended for the coming year. Meanwhile, time is running out for the coalition to get the 2024 budget through parliament this year.

For days, Chancellor Olaf Scholz (SPD), Vice-Chancellor Robert Habeck (Greens) and Finance Minister Christian Lindner (FDP) have been struggling behind closed doors to find a way out of the billion-euro hole in the budget. Lindner puts the figure at 17 billion euros. Habeck, who is also climate protection minister, even canceled his planned trip to the World Climate Conference in Dubai.

If a decision is to be made before New Year's Eve, a fundamental political decision must be made quickly, ideally before the cabinet meeting on Wednesday, so that there is still enough time for the parliamentary process. It is also possible that an agreement in principle will be reached before Christmas, but the budget will not be passed by parliament until the beginning of 2024. Without a fundamental political agreement before Christmas, a veritable government crisis looms.

Tug-of-war over citizens' income

Lindner had identified social issues, including the citizens' income, as an area for savings. Social Affairs Minister Hubertus Heil rejected demands from the CDU/CSU and FDP to stop the sharp average increase of twelve percent at the start of 2024. The SPD politician explained that it would be "morally irresponsible and incompatible with the constitution" to deny those affected an adjustment of the standard rates. Government spokesperson Steffen Hebestreit also said: "I am not aware of any plans within the federal government to change the legal basis."

The FDP points to the fact that inflation has fallen sharply in the meantime and is sticking to its demand. FDP parliamentary group leader Christian Dürr told the "Bild" newspaper: "I think it would be right to discuss the calculation of the citizen's allowance in the course of discussions on the budget. Because the method of calculation dates back to the times of Hartz IV - that is long outdated." It must be carefully examined "whether the old calculation method can be used to maintain the wage gap". Anyone who works should "always have more money left over than someone who doesn't", said the FDP politician.

The German Social Association (SoVD) disagreed. Chairwoman Michaela Engelmeier told the Funke Mediengruppe newspapers: "Publicly calling for the red pencil to be applied to the citizen's income again completely ignores the reality of people who are dependent on social benefits and who have been waiting for many months for an inflation adjustment because their money does not last until the end of the month."

Instead, Engelmeier called for a "constructive debate" on strengthening the revenue side. In the Funke newspapers, Left Party leader Martin Schirdewan demanded that at least ten percent of the "unearned income" of the country's richest ten billionaires be taken from them in the form of a wealth tax. He called the current debate about cuts in the social sector "completely absurd".

Suspension of the debt brake under review

SPD leader Saskia Esken continues to insist that the debt brake should also be suspended for 2024. In the Stuttgarter Zeitung and Stuttgarter Nachrichten newspapers, Esken argued that Germany will continue to incur direct and indirect costs as a result of the Russian war against Ukraine. These could not easily be met from the normal budget. "But the constitution does not expect us to do that. The exception to the debt brake is also part of the constitution," emphasized Esken.

The debt brake is to be suspended again for the current year in order to prevent the budget from becoming unconstitutional. The Bundestag Budget Committee wants to question experts on this today. According to their written statements, the majority of them consider the Federal Government's approach to be justifiable. It is comprehensibly justified that Germany was in an emergency situation at the beginning of the year due to the energy crisis. This is the prerequisite for suspending the debt brake.

Worry lines among municipalities, police and climate activists

The German Association of Towns and Municipalities called for exemptions from the debt brake for "important generational tasks such as climate protection and infrastructure". "This is also justified because Germany has the lowest national debt of the G7 countries and today's investments secure tomorrow's prosperity," said Gerd Landsberg, Chief Executive of the German Association of Towns and Municipalities, in the Rheinische Post newspaper. Many local authorities are unsettled by the budget problems at federal level, as they are affected in many ways, Landsberg reported. This applies, for example, to municipal heating planning, building renovations and the expansion of charging infrastructure.

The police union (GdP) warned against cuts in the security sector. The GdP chairman for the federal police, Andreas Roßkopf, told the "Rheinische Post" that the current working conditions in many places were already "scandalously bad". Roßkopf called on Federal Minister of the Interior Nancy Faeser (SPD) to prevent further cost-cutting measures at all costs. Otherwise, the trade unionist warned, the problems with controlling migration could also worsen.

Climate activist Luisa Neubauer warned the German government against cutting climate investments because of the budget problems. Anyone who cuts back on climate protection just to avoid taking on new debt has not really understood the world we live in, Neubauer said in an RTL interview. Germany is in debt anyway: to the foundations of life, to the younger generation, to people in the global South, to the future. "This indebtedness is happening every day," emphasized the Fridays for Future activist.