The budget is only one of the traffic light's problems

The traffic light coalition will not manage to get a budget through the Bundestag this year. This is only the preliminary climax of the budget crisis of the traffic light coalition, triggered by the historic constitutional court ruling on November 15. But what does this mean now?

What is the situation?

Three weeks ago, the Federal Constitutional Court plunged the traffic light coalition into its most serious crisis to date. 60 billion euros had to be cut from the Climate and Transformation Fund (KTF). This is a special fund with which the federal government wanted to green the economy, promote e-cars and the railroads and finance building renovations. In addition, the Economic and Stabilization Fund also had to be closed as a result of the ruling.

Never before had a federal government had to cope with such a blow. It quickly drew up a supplementary budget for the current year and decided to suspend the debt brake. Since then, Federal Chancellor Olaf Scholz, Finance Minister Christian Lindner and Economics Minister Robert Habeck have been trying to agree on a new budget for 2024. This was actually supposed to happen before Christmas. It is now clear that it will not be possible to pass the budget for 2024 in the Bundestag this year.

This is because the necessary legislative process takes time and cannot be rushed through. The Federal Constitutional Court had already warned the traffic lights about this in a ruling last summer. It is still possible that the traffic light leaders will reach an agreement in principle before Christmas and that the Bundestag will pass the budget in January. This will result in provisional budget management. The state will continue to pay standard expenditure such as pensions, student grants and citizens' allowance, but everything else will have to be approved by the Minister of Finance.

How much money is missing?

Lindner commented on this for the first time last week. According to him, it is around 17 billion euros. In interviews with Bayerischer Rundfunk and "Wirtschaftswoche ", however, he has now clarified this. This money is missing for the 2024 budget and is only partly due to the ruling of the Constitutional Court. Six billion euros would come from additional expenditure on the citizens' income and three billion euros from a reduction in the electricity tax. Lindner emphasized that this should have been negotiated anyway. So this sum has nothing to do with the KTF billions.

Why is it taking so long?

One reason is that there is little room for maneuver. 380 of the 450 billion euros in next year's budget are statutory benefits, as Lindner told Wirtschaftswoche. This cannot be changed in the short term, and even if a way could be found, it would require "political unity", he added. But this does not exist. The three coalition parties have completely different priorities. The FDP is strictly against tax increases and a renewed suspension of the debt brake. The SPD does not want to cut social benefits and the Greens insist on climate protection measures.

What role does the Climate and Transformation Fund play?

The Karlsruhe ruling was a major blow for the Climate and Transformation Fund (KTF), as it was something like the basis of the traffic light coalition. It made it possible for all three parties to get what they wanted. Habeck was able to plan expensive climate neutrality projects without having to break the debt brake. The latter is the FDP's most important concern. This left room in the budget for the citizens' income that the SPD wanted to introduce. As a result of the ruling, 60 billion euros had to be cut from it because it was originally intended to combat the economic consequences of the coronavirus crisis and, according to the Federal Constitutional Court, should not have been reallocated. In addition, the debt should not have been taken on in advance.

How much money is left?

According to budget documents, it should be around 39 billion euros. The money comes from two sources: Money from CO2 pricing in Germany and European emissions trading flows into the KTF. According to the draft budget for the coming year, this will amount to 19.1 billion euros. There is also already a reserve there. Before the ruling, this amounted to 80 billion euros, including additional global revenue. As 60 billion euros will now be removed, 20 billion will remain. This would leave around 39 billion euros available for 2024. However, the plan was to spend a total of 57.6 billion euros in 2024. According to information from ntv, however, the shortfall is actually lower than these figures suggest. The shortfall is 12 billion euros. Either way, there are two huge holes: one in the budget and one in the KTF.

Is there enough money in the KTF?

That is now the question. Habeck, Lindner and Scholz are working on a new economic plan for the KTF. This is a list of how much money will be spent when and on what. Until then, the fund has been blocked. Everything that has already been legally committed is still valid, said Lindner. The rest is under review.

On Sunday, Habeck said on ARD television: "In the talks we are holding, we are really trying to identify, in the depths of budget tables or the climate and transformation fund, what may come later, what we may not want to or be able to do at all." It is piquant that the KTF was also intended to pay for important issues such as the subsidies for Intel and TSMC chip factories near Magdeburg and Dresden. Saxony-Anhalt's Minister President Reiner Haseloff has already said that Scholz has assured him and Saxony's Minister President Michael Kretschmer that the agreed subsidies will remain in place.

Immediately after the ruling, Finance Minister Christian Lindner blocked the KTF and announced that a new economic plan would be drawn up. Habeck emphasized that promises already made for the coming year could be kept.

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Despite the efforts of Olaf Scholz, Christian Lindner, and Robert Habeck, the traffic light coalition may not be able to pass the budget for 2024 in the Bundestag this year due to the complexity of the necessary legislative process and disagreements among coalition parties. This budgetary crisis stemmed from a constitutional court ruling in November that required cutting 60 billion euros from the Climate and Transformation Fund, which was a key component of the traffic light coalition's platform. The ruling also required closing the Economic and Stabilization Fund. The situation is further complicated by the fact that the coalition parties have different priorities, with the FDP strictly against tax increases and a renewed suspension of the debt brake, the SPD opposed to cutting social benefits, and the Greens advocating for climate protection measures.

Source: www.ntv.de