SPD leader Esken in favor of suspending the debt brake
The Federal Constitutional Court's ruling on the supplementary budget for 2021 is a colossal setback for the traffic light government. The leader of the SPD is calling for the debt brake to be suspended once again - a demand that is not new to her. An economist has also expressed similar views.
Following the Federal Constitutional Court's budget ruling, SPD leader Saskia Esken is calling for the debt brake to be suspended once again in order to finance necessary investments. "As we are in a continuing crisis situation due to external influences, I continue to advocate suspending the debt brake for 2023 and 2024," Esken told the Funke Mediengruppe newspapers. 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". Esken had already spoken out in favor of a renewed suspension of the debt brake before the ruling of the highest German court on the 2021 supplementary budget.
Commenting on the ruling, she said that it posed "a major challenge" for the federal government, but also for some federal states, particularly in connection with climate change and its social and economic consequences. The Constitutional Court had already made it clear in 2021 that the Basic Law also includes an obligation to protect against the consequences of climate change. "Accordingly, we will join forces to improve the modernization of the country, our infrastructure and our education system on the one hand and to secure the financing of the Climate and Transformation Fund on the other," explained the SPD party chairwoman. "It is clear that we will not allow any cuts in climate protection and its socially just design, nor in the welfare state."
She also reiterated the SPD's call for higher taxes on top earners to generate additional revenue. "The principle remains that strong shoulders must bear more than weak ones," she said. "In order to be able to shape the future, we need a state that is capable of taking action and investing in crisis situations." Corresponding proposals can be found in the SPD's main motion for the upcoming party conference.
Economist Schnitzer also in favor of suspension
Monika Schnitzer, head of the German Council of Economic Experts, has also spoken out in favor of suspending the debt brake in the coming year and reforming the rule in the Basic Law in the medium term. "A reform of the debt brake, which would create greater scope for debt financing of net investments, could provide a remedy for climate projects," Schnitzer told the Rheinische Post newspaper. "However, a debt-financed disbursement of climate money would be out of the question because it is not an investment," she added.
"However, it seems unlikely that we will be able to agree on a reform of the debt brake in this legislative period," explained the Chair of the German Council of Economic Experts. "A transparent solution could be to justify a renewed exception to the debt brake with the effects of the energy crisis and the resulting additional expenditure required to cushion the burden and the necessary expansion of the energy supply," said Schnitzer. The latest ruling by the Federal Constitutional Court considerably restricts the coalition's financial room for maneuver. "It will become much more difficult to finance the planned investments for climate projects and to pay out the climate money as planned from 2025, with which the revenue from the CO2 tax is to be returned to the citizens," said Schnitzer.
Given the ruling by the Federal Constitutional Court, the SPD, led by Saskia Esken, is advocating for another suspension of the debt brake to fund necessary investments, as the country continues to confront external crises. Similarly, Monika Schnitzer, head of the German Council of Economic Experts, supports suspending the debt brake in the near future and reforming it in the long term, emphasizing the need for more flexibility in financing climate projects.
Source: www.ntv.de
