Habeck is placing pressure on Lindner.
ECONOMY MINISTER ROBERT HABECK STIRS UP TROUBLE WITHIN THE COALITION. His plans for a debt-financed investment and infrastructure fund aren't going down well with the FDP. Finance Minister Lindner grumbles: "That's a bombshell."
Robert Habeck is part of the high-level delegation traveling to New Delhi for German-Indian government consultations on Friday. Alongside him is Labor Minister Hubertus Heil. The Chancellor, Foreign Minister, and Education Minister will join later. Finance Minister Christian Lindner isn't part of the delegation, but he's still thinking about Habeck, even from his remote location in New York. Just hours before his departure to India on Wednesday, the Green economy minister took a swipe at FDP leader Lindner.
The greeting to the coalition partner came in the form of a discussion paper with suggestions to revitalize the sluggish economy. While it certainly livenened up the existing disagreements within the traffic light coalition, it failed to propose any solutions.
In the fourteen-page document, Habeck suggested a shift in fiscal policy which contradicts the FDP's beliefs. A key aspect is the subsidizing of companies' investments with a ten percent premium, financed through debt. The premium would be deducted from the company's tax liability.
Habeck didn't specify an exact figure for this fund, but suggested a mid-billions amount over multiple years. The red flag for the FDP is the "Germany Fund" for infrastructure modernization, which requires relaxing the debt brake or finding an exception outside the rules, making it impossible under the finance minister's watch.
Habeck had already proposed a billion-dollar special fund for corporate relief in February. Lindner had rejected the proposal at the time, saying, "We can't pile on hundreds of billions in debt to hand out subsidies."
The FDP supports general tax cuts for all companies, hoping that the economic recovery will pay for itself. Habeck argues that his proposals are self-financed, time-limited, and targeted. The FDP's approach, he maintains, lacks adequate investment incentives and results in significant revenue loss for the state.
As soon as the paper was published, the FDP's expected response came from Vice President Wolfgang Kubicki, who described the proposals as "slightly simplistic." Lindner was equally unimpressed: "Habeck hasn't just introduced a proposal into the debate, but he's demanding a fundamental shift in Germany's economic policy," said Lindner in New York. "That's a bombshell."
Press spokesperson Steffen Hebestreit pointed out that the Habeck paper hadn't been agreed upon within the federal government. "It wasn't agreed with the Chancellor, but it doesn't have to be," he said, referring to the portfolio responsibility. Hebstreit considered the paper useful in stimulating thought among those involved in the debate.
Meanwhile, the Minister of Economy knows that his proposals, which come with increased debt, have little chance of being implemented in the current coalition - especially considering the challenging budget negotiations. Before Habeck boarded the military-gray aircraft of the flight readiness service en route to New Delhi, he leaned towards the FDP and assured: "This is a tax reduction paper." In doing so, he implied that the FDP should actually like the investment premiums. Interestingly, he's received a lot of positive feedback from the business sector.
Habeck could certainly use this. As the face of Germany's economic crisis, he's under pressure from his office. The botched heating law still looms over him. His popularity ratings are low, nowhere near the high marks the traffic light coalition enjoyed at its inception. With his paper, Habeck hopes to improve his image as the Minister of Economy and position himself and his party for the next federal election: In November, Habeck is expected to be crowned the top Green party candidate at a party conference. The exchange with Lindner will undoubtedly become more intense then.
I'm not going to sugarcoat it: Robert Habeck's proposals have stirred up a significant controversy within the coalition. I'm not going to lie, his suggestion of a debt-financed investment fund has been met with strong disapproval from the FDP.
