Social Democrats critique the FDP, targeting Scholz.

Olaf Scholz pushes his ministers to negotiate budgets rigorously. SPD members are worried about the Chancellor's insistence on austerity measures: is he being led by Christian Lindner and the FDP? Frustration is growing within the party.

Historical events often provide nightmares. Many SPD members are experiencing this currently, recalling the pre-Christmas nights with caution. In 2023, Federal Chancellor Olaf Scholz, Federal Economics Minister Robert Habeck, and Federal Finance Minister Christian Lindner negotiated the 2024 supplementary budget until early morning. The harsh budget cuts that resulted were painful for the SPD MPs. They also had to face complex, tough budget discussions within the strict framework set by the coalition leaders. A similar scenario is developing in the negotiations for the next budget. Tension is rising in the SPD faction.

Last year, after a significant constitutional court ruling, the coalition government had to make cuts of 17 billion euros compared to the proposed budget for 2024. This week, estimates for the expected tax revenue for the coming year were revealed. They suggest a drop of around 22 billion euros, more than some had expected. The savings targets of 25 to 30 billion euros mentioned by Lindner earlier appear insufficient in light of this.

Especially as some departments have announced increased requirements instead of cutting back. This includes the SPD-led Federal Ministry of Defense, led by Boris Pistorius. Scholz himself put him in office and charged him with revamping the Bundeswehr while aiding Ukraine.

Lindner's approach and Scholz's influence

This week, the SPD directed criticism at Lindner. Lindner opposes a debt brake opening and additional revenue sources like tax hikes or subsidy cuts. Instead of dictating savings targets to the ministries, Lindner should "fulfill his responsibility and consider how to provide the necessary financial resources," said Tim Klüssendorf, an SPD member of parliament, to ntv.de. Klüssendorf, a spokesperson for the party's left-leaning faction known as the Parliamentary Left, has long advocated for additional revenue, such as a super-rich tax. He warned: "Further reductions in social infrastructure, internal security, or development work would be reckless."

Axel Schäfer, a Bundestag member from Bochum, is more direct: "The SPD will never accept this austerity path." Scholz needs to "take a stand," Schäfer added to Stern magazine. Economic SPD politician Sebastian Roloff also commented, "I've run out of imaginative ideas as to how a responsible budget can be drafted under the current circumstances." He called for more investment in the country. These strong words from a typically supportive SPD faction may indicate a shift in power dynamics.

Scholz's phrase, "sweating is the order of the day," when preparing the upcoming budget has shocked many in the faction. Didn't Development Minister Svenja Schulze agree to cuts of almost one billion euros to a reduced budget of 11.22 billion euros for the present year? Didn't Federal Labor Minister Hubertus Heil tighten citizen's benefit sanctions under pressure from the FDP to get more people into work and decrease the number of citizens receiving benefits? Didn't Scholz promise Federal Defence Minister Boris Pistorius support in upgrading the military forces and assisting Ukraine "for as long as required"? Is Scholz seriously blaming SPD federal ministers for not being dedicated enough so far?

Probably not. This announcement may have been a sign to Lindner and the FDP that Scholz will continue to support the agreed austerity policies. In exchange, the Free Democrats might drop their obstruction of Pensions Package II. Regardless, the fallout is significant internal dissatisfaction. The tension isn't just limited to federal politics; it's also affecting the state governments, which are being affected by the rigid debt brake and economic lethargy, including falling tax returns.

Juso chairman and leader of the SPD's youth organization, Philipp Türmer, expressed his frustration in an interview with ntv.de: "The FDP's ideological barricades seem to have suppressed any sense of responsible politics." He expects "a social democratic chancellor to not let the smallest coalition partner get away with such recklessness, and the SPD must prepare a sustainable budget." Türmer criticized the finance minister, saying, "Instead of saving on pensions, citizens' benefits, or development policy, which is important for foreign affairs, the finance minister should be reprimanded and forced to reconsider: This unfortunate austerity path must be abandoned."

To date, political officials haven't dared to confront the ruling administration's leader as aggressively as the Juso chairmen in the SPD traditionally do with chancellors. Nonetheless, even though the Chancellor's electrifying speech during the federal party conference in December brought him much appreciation, dismay has already set in. This is especially true for the left-wing faction of the party, which has always condemned Scholz with misgivings. During the party conference, the left flank of the SPD attempted to steer the program in a more progressive direction, with demands such as imposing a wealth tax. The Chancellor, however, doesn't adopt this shift in the SPD's direction.

Similarly, the SPD's argument for a reformation of the debt brake is compromised by Scholz. This view is also shared by the Chairmen Lars Klingbeil, Saskia Esken, and General Secretary Kevin Kühner. Yet, Scholz seldom voices this demand. He insists on the constitutional standing of the debt brake, creating the appearance that it cannot be changed. In his discussions on tax and fiscal matters, Scholz appears to be more in agreement with the FDP leader than with his own colleagues.

Currently, Scholz has the rare ability to simultaneously anger social politicians, economists, and businesspeople by insisting on budgetary constraints. The cause of their dissatisfaction is always a lack of funding. As reported by ntv, the SPD parliamentary group is now creating budgetary maneuvers that could create more flexibility within the budget. While tax increases are challenging to achieve with the FDP, options like cutting Ukraine aid or defense spending could be feasible.

Consequently, obtaining support from the CDU/CSU becomes crucial to allow these adjustments. However, the CDU/CSU cannot merely ignore this issue because they are also calling for greater armament and more determined backing for Ukraine. On the downside, the sister parties are immersed in election mode - European elections, state elections in the East, and the federal elections by next year. This complicates the CDU and CSU overcoming their resentment surrounding the traffic light's management of the special fund.

A significant portion of the 100 billion euros in special debts will go towards repaying interest debt and purchasing replacement equipment, rather than exclusively into investments as stipulated. This gives the impression that they have been deceived. Moreover, the CDU has recently made the debt brake a part of their fundamental program. It must be daunting for the conservatives to determine how they would fulfill all their ambitious promises if they gain power.

Scholz's proposal to raise the minimum wage to 15 euros illustrates how election considerations affect not only the CDU/CSU but also the traffic light parties. His firm statements have been a much-needed relief for weary SPD members, but it hasn't burdened him financially; the funding for higher wages lies with his federal ministers rather than himself.