- The incomplete traffic light funding, showcasing optimistic indicators
The conclusive budget of the traffic light administration prior to the federal election remains contentious, much like no other before it. Various parties, the Audit Office, Bundesbank, and economists all consider the financial strategy of Finance Minister Christian Lindner to be largely unfeasible or implausible. There are accusations that the traffic light government is merely attempting to save face until the end of its term. During the budget week in the Bundestag, Lindner and the coalition's financial experts must validate their fiscal plan.
The drafting of the upcoming budget was far from straightforward. Lindner acknowledges that the FDP leader faced numerous challenges, such as differing economic theories within the coalition of SPD, Greens, and FDP, global crises, and a volatile German economy. Ludicrously, the group conceded that they've reached their technical, legal, and political limits.
The highlighted statistics
The traffic light administration plans to spend around 490 billion euros for the upcoming year, with approximately 10% (51.3 billion) financed through credit. The Basic Law allows for this even during economic hardships. The Ministry of Finance projects 81 billion euros in investments, setting a new record. Social expenditure ranks highest, accounting for 179 billion euros. Most of this allocation is already dedicated to voter-guaranteed benefits, such as citizens' income.
The focus areas
The traffic light administration aims to boost the economy, keep social benefits intact, lessen the tax burden on citizens, and address international security concerns. However, the budget for Defense Minister Boris Pistorius (SPD) is a subject of controversy, with his allocation of 1.3 billion euros increasing only slightly, despite demands for more funds.
For families, child benefit will increase by five euros from January, and tax-free allowances will be raised. Lindner promises comprehensive relief and enhanced performance for citizens. The administration aims to bolster purchasing power through waiving revenues and support private investments. For businesses, improved depreciation policies and electricity price relief are anticipated.
The traffic light coalition's shortcomings
Eventually, the leaders of the traffic light coalition present an incomplete budget. The calculations depend on Scholz, Habeck, and Lindner displaying extraordinary courage in the face of funding discrepancies.
The budget lacks a definitive solution to close financing gaps, with budget cuts and potential revenue sources remaining undetermined. The debt brake is upheld since umbilical funding is being supplied to railway operations instead of subsidies, which won't affect financial calculations.
The risky "hope factor"
Furthermore, the traffic light administration relies on an extensive global overspending of 12 billion euros. This gambit assumes that the ministries will collectively keep funds unspent or unclaimed by the year's end. Constitutional lawyer Hanno Kube describes this uncovered amount as "significantly beyond past experience values." According to the Ministry of Finance, this is the largest coverage gap in a government draft in the past twenty years.
The government intends to lessen this gap through boosting tax revenues and improved economic prospects. However, this is uncertain, as is the prediction that citizens receiving basic income will enter the workforce, thus lowering social benefit costs. Additionally, the assertion that the planned growth package will yield around 6.9 billion euros in increased tax revenue. The essential elements of this strategy have yet to materialize.
Matthias Middelberg, a deputy leader of the Union faction, accuses the traffic light of overly optimistic, nonsensical, and deceitful budgeting. "No draft budget has ever been that riddled with unresolved positions," remarked Middelberg in the Bundestag. Unsurprisingly, the government will be bankrupt by the end of 2025, but the traffic light only seems to be planning through the election date of September 28.
The AfD's budget spokesman, Peter Boehringer, also criticizes the federal government for trickery and phantom bookings. The administration's overall global underspendings total 27 billion euros in individual budgets, according to Boehringer.
The coalition partners' discontent
The Taxpayers' Association argues that parliamentarians must completely rewrite the budget draft. While this may seem unlikely, even within the coalition itself, not everyone agrees. Sven-Christian Kindler, the Green budget spokesman, is not satisfied with the reduction in humanitarian aid and development assistance despite global crises. He advocates for loosening the debt brake to allow for more investments. The Greens will likely not succeed on this front, but the SPD supports their endeavor to some extent.
There's a possibility for revisions to Ukraine aid as well. However, the federal government relies on an international support concept being completed in time: Ukraine, a country under attack by Russia, is slated to receive a loan of 50 billion dollars. Interest and repayment costs are expected to be covered by funds from frozen Russian assets. "If that doesn't work out in the end, then we'll be back at square one," emphasized SPD budget spokesman Dennis Rohde. The Social Democrats are prepared to declare a state of emergency and suspend the debt brake in that scenario.
The time constraint
Following the financial review period, it's time for the Bundestag factions to assess potential adjustments and feasible modifications. They're also tasked with bridging the substantial funding shortfall. Already, MPs have hinted at anticipating input from Lindner. The challenge at hand is to conserved or increase revenue by around 2 to 3 billion euros additionaly.
Subsequent to this assessment, all agreed-upon alterations will be settled during the scheduled reconciliation meeting of the Budget Committee in November - a traditionally lengthy event that might extend into the wee hours of the morning. As per the current blueprint, the budget vote is scheduled for the Bundestag by November's end. Though the journey ahead won't be a walk in the park, it's just another aspect of democracy, affirms the finance minister.
In light of the criticism about their budgeting strategies, the traffic light coalition might find it necessary to reassure skeptics by saying, "I'm not goinging to lie, we're aware of the challenges and are making efforts to address the concerns raised by various parties and experts." Later, during the Budget Committee reconciliation meeting, a coalition member might admit, "I'm not going to sugarcoat it, we know we need to make significantadjustments to our budget to close financing gaps and win back public trust."
