The most important questions and answers about the disgrace of Karlsruhe

The most important questions and answers about the disgrace of Karlsruhe

The reallocation of coronavirus funds to the German government's climate transformation fund is unconstitutional. This is not only embarrassing for the federal government, but the coalition government now also lacks a lot of money for its projects. ntv.de answers the most important questions about the ruling from Karlsruhe.

What did the Federal Constitutional Court decide?According to the judges, the debt brake may not simply be circumvented. But that is exactly what the coalition government has done in the opinion of Germany's highest court. Under Chancellor Angela Merkel, the old federal government had suspended the debt brake during the pandemic and obtained permission from the Bundestag to take on a further 60 billion euros in debt in addition to previous coronavirus loans. But then the pandemic was over sooner than expected. As a result, the borrowed money was not needed for further coronavirus aid, as originally calculated. So far, so good and so legitimate.

Nevertheless, the money, or more precisely the loan authorizations, were on the table. And thus the question: What do we do with it now? The traffic light's answer: We'll simply use the money for climate protection and point out that this will boost the pandemic-stricken economy. The new government shifted the 60 billion credit authorization to the Climate and Transformation Fund (KTF). This is a special fund that sits alongside the actual federal budget. This maneuver was not in order, the court in Karlsruhe has now ruled - also because the money was taken from 2021 to 2022. This was also objected to.

This is because the Ampel circumvented the debt brake. This may only be suspended in acute crises and emergency situations that suddenly hit the country and were not to be expected. For example, in the event of a pandemic or a war such as the one in Ukraine, for which the debt brake was also suspended and the special assets of the Bundeswehr were created. What is not allowed, however, is to spend the money on something else afterwards. The piquant thing is that climate change is not accepted as an acute crisis. Although it is a task of the century, it is not an acute, sudden event that could not have been foreseen. The court's message: the fight against climate change must be financed differently. How? The traffic lights will now have to think about this. It won't be easy - because the court also made it clear that the debt brake also applies to special funds such as the KTF. In other words, the bottom line is that the debt brake must be adhered to, regardless of which fund the expenditure comes from.

Why is this important?Firstly, the court makes it clear that the debt brake applies. So anyone who thinks it is important that Germany does not accumulate an ever-increasing mountain of debt can applaud the Constitutional Court. But apart from that, the ruling is causing political Berlin to tremble. 60 billion euros, most of which had already been budgeted, are now missing. That is a huge sum. By comparison, the defense budget this year - excluding special funds - was a good 50 billion euros.

The German government now has two options: either find the money elsewhere or cut the plans. Both are politically explosive. There is virtually no room for maneuver in the actual federal budget. It might be possible to squeeze out a billion here and there. But 60 billion? That's out of the question.

For whom is the ruling a victory?First of all for the CDU and CSU, because they had filed a lawsuit in Karlsruhe against the reallocation of the coronavirus aid. They have exposed the traffic light and could benefit from this in the electorate's favor. But apart from the opposition's howls of triumph, the ruling is a success for the constitution. The debt brake is part of it and it will now be strengthened. The Constitutional Court makes it clear that the rules of the Basic Law apply. Without ifs and buts. There are no plans for accounting tricks. That is also a strong signal to future governments.

For whom is the ruling a defeat?The loser is clearly the federal government. After all, the traffic light factions jointly agreed to the federal cabinet's plan to retroactively reallocate unused coronavirus aid to the climate transformation fund. The first loser, however, is Federal Finance Minister Christian Lindner. In the end, he and his ministry are responsible for the constitutionality of the budget. This was not the case after the Karlsruhe judges' vote. There were already plenty of doubts about the procedure in 2022. But Lindner threw caution to the wind and, as the person ultimately responsible, caused further damage to the federal government's reputation, but this time a huge one. Lindner's advantage: the idea of restructuring goes back to his predecessor in office - former Federal Finance Minister Olaf Scholz.

Worse still, the ruling will affect the future scope for action of the traffic light system. From the funds for the transformation of the economy to renewable energies, the expansion of electromobility, the subsidies associated with the Heating Act to investments in Deutsche Bahn and the promotion of new chip factories, numerous core projects are in question. However, even after a joint appearance by Federal Chancellor Olaf Scholz, Economics Minister Habeck and Lindner and the questioning of Scholz by the Bundestag, it remains unclear what Plan B of the coalition government now looks like.

Will there be tax increases now?This is actually inconceivable because the FDP clearly rejects them. In view of the difficult economic situation, Lindner considers tax increases to be even more counterproductive at present. His coalition partners, on the other hand, have a number of proposals for more revenue in the drawer: a higher wealth tax, a special tax for the super-rich or the reduction of tax subsidies, such as the company car privilege, would be viable options from the point of view of the SPD and Greens, even if Lindner seems to have the backing of the Social Democratic Chancellor in terms of budgetary policy. Increasing inheritance tax, on the other hand, would not help the federal government. The revenue would go to the federal states. It is also questionable whether a tax increase could be set up for the following year within a few weeks.

Are special funds now generally unconstitutional?No, the total of 29 federal special funds are not unconstitutional. However, the court made it clear that the debt brake's exemption rules also apply to special funds. In addition, the applicable budgetary principles may not be circumvented through the use of special funds. This means, for example, that the financial resources in a special fund may only be used in the financial year for which they were provided. "The de facto unlimited continued use of emergency-related credit authorizations in subsequent financial years without offsetting against the 'debt brake' while at the same time offsetting them as 'debt' in the 2021 financial year is therefore inadmissible," the court stated.

The ruling has no effect at all on the special fund for the Bundeswehr, as this was enshrined in the Basic Law and is therefore not subject to the debt brake.

What does this mean for the debt brake?The debt brake has been confirmed under constitutional law, which will have a direct impact on the handling of special assets (see above). This means that the discussion about the sense and nonsense of the constitutional regulation is back in full swing. Especially as not only the Greens and SPD (with the exception of the Chancellor) are calling for reform, but also the pro-employer Institute of German Business. Although it is right to put a stop to "further socio-political desires", investments should be possible: "The debt brake must neither be a brake on growth nor a precursor to deindustrialization," says IW Director Michael Hüther.

Will the traffic lights fall apart?At least not yet. None of the governing parties would have anything to gain from an early election in view of the poll figures. The FDP even threatened to be thrown out of the Bundestag. A switch by the SPD to the CDU/CSU in order to forge a grand coalition is also practically inconceivable. The Social Democrats would be at the mercy of the CDU and CSU. They could practically dictate a coalition agreement. But would the Conservatives even want that? In the midst of a very difficult situation - recession, inflation, war in Ukraine and conflict in the Middle East - the CDU/CSU would have to assume responsibility without any guarantee of quick success. Strategically, it would be better off driving the traffic light for another two years in the hope that it will then carry its lead over the other parties to the finish line and be able to forge a grand coalition as the senior partner.

The SPD, Greens and FDP thus remain dependent on each other and are to a certain extent doomed to success. The extent to which this is also the perception within the coalition can be seen from the past few weeks: Things have been noticeably quieter since the summer break. The disgrace of Karlsruhe came in the middle of a phase of internal pacification. However, the temporary end to the ongoing dispute could be history if the coalition now has to struggle to finance its most important projects.

1. The ruling from Karlsruhe deemed the coalition government's reallocation of coronavirus funds to the Climate and Transformation Fund (KTF) unconstitutional, as it circumvented the debt brake.
2. The Federal Constitutional Court in Karlsruhe ruled against the German government for bypassing the debt brake in its attempt to shift 60 billion euros of loan authorizations to the KTF for climate protection.
3. The German Bundestag will now have to find alternatives to finance its projects following the Federal Constitutional Court's ruling, as the coalition government lacks 60 billion euros due to the debt brake circumvention.
4. The SPD, Alliance 90/The Greens, and FDP, coalition members in the German government, are facing political challenges after a ruling from the Federal Constitutional Court declared their reallocation of coronavirus aid funds unconstitutional.
5. The Federal Government's climate policy plans are in jeopardy following the Karlsruhe High Court decision, which revoked its authorization to divert 60 billion euros reserved for coronavirus aid to finance climate protection projects.
6. The German government is grappling with potential tax increases or budget cuts in response to the Federal Constitutional Court's ruling, as the CDU and CSU, along with the FDP, are not in favor of raising taxes due to the current economic situation.
7. The parties within the German coalition government, including the SPD, Greens, and FDP, remain hesitant to pursue early elections, as doing so could pose risks for each party and potentially destabilize the country during the ongoing Corona crisis.
8. The German Union parliamentary group, including the SPD, Greens, and FDP, must work together to find alternative measures following the Karlsruhe High Court's ruling, as their unconstitutional reallocation of coronavirus aid funds has put the country's climate policy and budget at risk.

Source: www.ntv.de