Top-level meeting on the budget: these are the problems of the traffic lights
Finance Minister Christian Lindner has already prepared his colleagues in the coalition government for "considerable efforts". The FDP leader warned that intensive discussions would have to be held before a constitutionally sound budget for 2024 could be drawn up, "which will not always be easy".
This evening, the leaders of the three "traffic light" parties will now meet with Chancellor Olaf Scholz (SPD). Will they decide what the federal government will spend less money on next year? Or will they just promise to continue tackling the problems together?
The coalition committee has been formally scheduled for some time, but the Karlsruhe budget ruling is likely to change the agenda. After all, it is still unclear and highly controversial what consequences the government will draw from the ruling. This primarily concerns the budget for the coming year as well as billions in long-term investments in climate protection and the modernization of the economy. Tens of thousands of jobs are at stake, warn coalition partners.
Problem 1: Intel billions, heating subsidies - what's in the climate and transformation fund?
Since the ruling, the German government is missing 60 billion euros that were already firmly planned for investments over the next four years. Among other things, this was intended to finance the billions in funding for Intel and TSMC chip factories, funding for the replacement of old oil and gas heating systems, the refurbishment of the railroads, charging infrastructure for electric cars and many other projects.
Legally binding commitments can be made in 2024 even without the 60 billion because the fund has its own income and enough money. Also already certain: there will be no cuts to heating subsidies for the time being. But what about the rest? The plans affect the "economic core of Germany", warns Economics Minister Robert Habeck (Greens). The CDU/CSU proposes reversing the heating subsidy. One option would also be to generate more revenue by increasing taxes - something the FDP rigorously rejects.
Problem 2: Billion-euro hole in the 2024 budget
The ruling not only affects the climate fund, it has also indirectly torn a billion-euro hole in the budget for 2024. In total, the coalition will probably have to scrape together just under 20 billion euros.
This is mainly due to the fact that the federal government has to dissolve the special pot for the state energy price brakes, the Economic Stabilization Fund (WSF). Interest payments from this will now fall to the core budget, as will aid for flood victims, which was previously paid from a special fund. In addition, the government will have to dig deeper into the reserves it built up during the refugee crisis this year. These billions will also be missing in 2024.
The WSF resolution has concrete consequences for consumers: the energy price brakes will expire at the end of the year and not at the end of March as planned. Even if prices have fallen significantly in the meantime - the German government had described the extension of the brakes as insurance against unexpected risks.
Higher electricity prices could also affect citizens for other reasons: The federal government had actually planned a subsidy of up to 5.5 billion euros towards grid fees. The problem is that this subsidy was to be financed from the WSF. Will the money now come from the core budget?
Scholz has announced that he will set priorities and "naturally also restrict expenditure". But it remains to be seen what will be cut. The CDU/CSU, on the other hand, already has a list of cuts. On it: citizens' income, basic child protection, social benefits. The SPD and Greens reject this. The Greens, on the other hand, want to tackle what they see as climate-damaging subsidies, such as tax breaks for company cars.
Problem 3: Fundamental decision on the debt brake
A debate on the future of the debt brake flared up immediately after the Karlsruhe ruling. Many politicians from the SPD and the Greens are arguing for a reform that would allow the state to borrow more for important investments. This would mean that future projects would no longer be at risk. Economists also think this makes sense, and even some CDU state premiers have expressed an open mind. However, the FDP has so far insisted that the provision in the Basic Law should not be touched. CDU leader Friedrich Merz sees it the same way.
Problem 4: Not much time before Christmas
The traffic light coalition must decide when the budget for 2024 is to be adopted. There is not much time left this year - which would normally be the case. The Bundesrat only meets regularly on December 15. However, the SPD parliamentary group in particular is pushing for a quick decision. The background to this is that funding cuts for social organizations and other groups should be reversed with the budget resolution - without a resolution, these organizations may have to lay off staff at the turn of the year, warned SPD parliamentary group leader Rolf Mützenich.
If there is no federal budget at the beginning of the year, so-called provisional budget management applies. For the time being, only expenditure that is necessary to maintain the administration and fulfill legal obligations is possible. In practice, however, the Ministry of Finance can authorize the ministries to use a percentage of the funds in the unapproved draft budget each month.
- Despite the budget judgment by the Federal Constitutional Court, Christian Lindner, the Finance Minister, assures the 'Traffic Light Coalition' that they will work towards drafting a constitutionally sound budget for 2024, but he warns that this process might be challenging for the 'Federal Government'.
- Amidst the financial shortfall due to the budget judgment, the 'Federal Government' faces the dilemma of deciding whether to cut expenditures, increase taxes, or find alternative sources of revenue to fill the 'billion-euro hole' in the 2024 budget.
- Christian Lindner, leader of the 'FDP' in the 'Traffic Light Coalition', has strongly opposed the proposal by the CDU/CSU to reverse heating subsidies as a solution to the budget problem, echoing his party's stance against raised taxes.
Source: www.dpa.com
