Budget 2025 - Grumbling, grumbling, grumbling - how the coalition is talking up the budget again
## Contents
- Defense
- Tax Reliefs for Foreigners
- Social Security
- Debt Brake
- Development Aid
SPD General Secretary Kevin Kühnert pleaded, "Please let's discuss the budget only after the cabinet has made concrete decisions about it on July 17." He urged for a small summer break for Berlin politics and the people in the country. A heartfelt wish.
The decisions made by Olaf Scholz, Robert Habeck, and Christian Linders in 23 sessions and a total of 80 hours of negotiations are already causing heated debates just a few days later. It's not only the opposition that is critical by definition. People from their own ranks, including disgruntled ministers, are also causing trouble. The summer break and the autumn budget discussions in the German Parliament are expected to bring intense debates on several political issues:
Defense
Defense Minister Boris Pistorius played his cards highest and lost the most visibly. He had demanded a significant increase in his budget. "We're talking about an additional 6.5 to 7 billion euros for the coming year," he had declared in May. It eventually amounted to something more than a billion euros.
Pistorius is not satisfied. While on a visit to an NATO maneuver in Alaska, he expressed his frustration: "I have received significantly less than I had registered," said the minister. "This is disappointing for me because I can't start certain things as quickly as the Zeitgeist and threat situation require." Pistorius is now counting on getting a little more in the further budget discussions in the German Parliament.
The minister has interesting allies: On the one hand, there is Fraktionschef Rolf Mützenich, who usually has little patience for Pistorius' war-mongering rhetoric. Both agree on the idea of suspending the debt brake for certain expenditures.
The other ally is the Green budget expert, Sebastian Schenker-Widmann. He called the coalition leaders' agreements "a decent working basis." In the defense sector, there are "significant needs that we will have to consider in the parliamentary procedure." In other words, the last word has not been spoken yet.
Tax Reliefs for Foreigners
The traffic light coalition wants to attract foreign skilled workers to Germany with tax incentives. Foreigners who take up work in Germany should receive tax-free income of 30% of their gross wages in the first year, 20% in the second year, and 10% in the third year.
This is stated in the so-called Growth Initiative, which Scholz, Habeck, and Linders have agreed on with the budget. Surprisingly, Federal Labor Minister Hubertus Heil (SPD) feels left out. "That's one of the things I wouldn't have signed up for," he said on n-tv/RTL on Tuesday.
Heils Party colleague Bernd Rützel, Chairman of the Committee, told the Tagesspiegel that it was "problematic to pay different taxes for the same work". The Green labor market politician Beate Müller-Gemmeke finds that there is "a good reason for an equal treatment principle in our labor law".
The FDP disagrees: Heils Rützel's statements "don't bring Germany any further ahead economically", said the FDP budget politician Christoph Meyer. Tax incentives for highly qualified personnel are now "a building block for solving the labor shortage in half of the EU".
FDP deputy chairman Konstantin Kuhle declared the planned tax reduction a "test case". On the platform X, he asked: "Is Germany capable of sensible reforms or will good ideas, which work in other countries, be systematically destroyed by general discontent and anti-attitude?"
Citizen's Income
An update for Citizen's Income is also supposed to boost the economy, especially through numerous regulatory simplifications. The "principle of reciprocity" must be strengthened again. Some colleagues are shaking their heads, as these lines would remind many of the "encourage and compel" mantra of the Hartz IV years.
In the future, Citizen's Income recipients will face faster and higher cuts in benefits if they reject job offers or violate participation and reporting obligations. They will also have to accept jobs with a daily commute of three hours or less, and Jobcenters will have to search for jobs within a 50-kilometer radius of the Citizen's Income recipient's residence.
Harsher penalties, more participation requirements – so more people in work and less burden for the economy?
"We were able to prevent a budgetary disaster in the budget, that's the good news," said SPD deputy Jan Dieren to stern. "The bad news: The fiscal destruction frenzy of the FDP was incorporated into the economic package." The Greens also expressed significant doubts.
Debt Brake
That the last word has not yet been spoken on the debt brake was made clear by Rolf Mützenich immediately after the budget agreement. It took "a lot of tricks" to close the billions gap in the budget, Mützenich, the SPD fraction leader, grumbled. He reserved the right to still allow an exception to the debt brake.
But that the debt brake remains is a point win for Finance Minister Lindner and his FDP, who did not want to give an inch on this issue. The SPD's inflation? Followed uneventfully.
FDP fraction leader Christian Dürr trusts in the Chancellor: "We are now implementing what the Federal Chancellor said some time ago." Love SPD, stop listening to the Chancellor, that should probably be the message.
Development Aid
The fact that the last word has not yet been spoken on development aid was made clear by Rolf Mützenich immediately after the budget agreement. It took "a lot of tricks" to close the billions gap in the budget, Mützenich, the SPD fraction leader, grumbled. He reserved the right to still allow an exception to the debt brake.
But that development aid remains is a point win for Finance Minister Lindner and his FDP, who did not want to give an inch on this issue. The SPD's inflation? Followed uneventfully.
FDP fraction leader Christian Dürr trusts in the Chancellor: "We are now implementing what the Federal Chancellor said some time ago." Love SPD, stop listening to the Chancellor, that should probably be the message.
The Finance Minister only had to mention the "eternal 'roads in Peru!'" to finally declare development aid as a sacrificial lamb. The Minister, Svenja Schulze, SPD, wanted to cut 1.3 billion euros from the budget. Why plember money abroad when it gets tight at home? "That's good money," Schulze explained repeatedly. Because it ultimately protects prosperity and security. Schulze lost the battle – and yet she had to cut a whole billion Euros. That means a reduction of nearly ten percent for her small household.
As the only G7 country, Germany had recently met the so-called ODA quota, which requires 0.7 percent of the gross national income to be used for development projects. However, that's over. The global gap between need and budget has already reached record levels by 2023. The reason: the increasing number of crises and wars.
Four days after the agreement was reached in the "Frankfurter Rundschau," Minister Schulze stated in the record: "We should actually be doing even more for the countries south of the Sahara." And: "Those who find all this senseless can ask themselves why China and Russia are so actively involved in Africa, Asia, and Latin America."
Besides humanitarian organizations such as Misereor to Caritas and the Society for International Cooperation, Minister Schulze also had her green cabinet colleague Annalena Baerbock at her side.
The Foreign Minister had even been asked to give up two billion euros. She managed to prevent one billion, but now savings are to be made in the area of crisis and disaster relief. However, there is a promise from the Finance Minister "that additional financial resources will be made available for unforeseen humanitarian crises," as it says in the office. The value of this promise will be shown when the money is requested.
- Despite his frustration, Defense Minister Boris Pistorius finds allies in his fight for more funding in the defense sector, with Fraktionschef Rolf Mützenich and the Green budget expert, Sebastian Schenker-Widmann, sharing his view on suspending the debt brake for certain expenditures.
- While the traffic light coalition agrees on tax incentives for foreign skilled workers as part of the Growth Initiative, Federal Labor Minister Hubertus Heil (SPD) feels left out and criticizes the plan.
- In discussions about the budget, Finance Minister Christian Lindner and his FDP are able to secure the continuation of the debt brake, despite SPD's reservations, which has been a key demand of the FDP throughout the negotiations.
