Greens call for reform of the debt brake
The Federal Constitutional Court's budget ruling puts the German government's financial room for maneuver under severe pressure. The SPD and now the Greens are therefore in favor of suspending or reforming the debt brake. The coalition partner thinks little of this. The CDU/CSU is outraged.
Following the budget ruling by the Federal Constitutional Court, the Greens are campaigning for a reform of the debt brake in order to push ahead with further investment projects. The debt brake is "economically badly done", says Katharina Dröge, leader of the Greens' parliamentary group in the Bundestag, to the Berlin newspaper "Tagesspiegel". It slows down necessary investments and is "in its current form a burden for Germany as a business location", Dröge continued. "It is now also becoming clear that the debt brake is not flexible enough to properly support people and companies, even in times of crisis." The traffic light coalition will agree on a joint solution "in the near future".
The SPD appears to support these plans. "As we find ourselves in an ongoing crisis situation due to external influences, I continue to advocate suspending the debt brake for 2023 and 2024," SPD leader Saskia Esken told the Funke Mediengruppe newspapers at the weekend. At the same time, the tasks of climate change, digitalization and demographic change, which span financial years and levels, would make a general reform of the debt brake "unavoidable".
FDP is reluctant
However, the third member of the traffic light coalition is skeptical. Solutions will be found "where the ruling could influence the current budget discussions", explained the financial policy spokesman, Markus Herbrand, also in the "Tagesspiegel". Nobody should fear budget freezes like in the USA. However, the Liberal budget officer qualified: "We Free Democrats reject tax increases or additional debt to raise the lost funds."
FDP Secretary General Bijan Djir-Sarai agrees. In the "Tagesspiegel", he recommends that his own coalition "see the Karlsruhe ruling as a mandate to precisely strengthen compliance with the debt brake". However, he left open what a precise strengthening of the debt brake might look like.
Union warns again
Last Wednesday, the Federal Constitutional Court prohibited the coalition government from shifting remaining funds from the Corona Fund set up in 2020 to the Climate and Transformation Fund (KTF) and significantly restricted the coalition's financial room for maneuver. The CDU/CSU parliamentary group in the Bundestag thus successfully sued against the reallocation.
The CDU/CSU's budget experts are already warning the coalition against implementing the newly formulated plans, declaring an emergency for the current year and suspending the debt brake once again. "The only emergency we have is rather a political emergency caused by the federal government itself," CDU/CSU chief budget officer Christian Haase told the Funke Mediengruppe newspapers. "But there is no economic emergency, because otherwise the federal government would have had to declare it shortly after its fall forecast in October."
Due to the coronavirus pandemic, the federal government had subsequently increased the 2021 budget by 60 billion euros in the form of a credit authorization. In such exceptional situations, it is possible to take out loans despite the debt brake. In the end, however, the money was not needed to deal with the pandemic and its consequences. The current federal government consisting of the SPD, Greens and FDP therefore wanted to use the money for the so-called Climate and Transformation Fund and, with the approval of the Bundestag, reallocated it retroactively in 2022.
The ruling by the Federal Constitutional Court regarding the budget policy has escalated a debt dispute within the Traffic light coalition. The Greens, advocating for a reform of the debt brake, believe it hinders necessary investments and is inflexible during times of crisis, especially in areas like climate change and digitalization. Meanwhile, the FDP is reluctant, suggesting strengthening compliance with the debt brake instead of suspending or reforming it, and the CDU/CSU outright opposes any relaxation of the debt brake, warning against an economic emergency.
Source: www.ntv.de
