Traffic light could determine ongoing emergency situation in the Bundestag

Traffic light could determine ongoing emergency situation in the Bundestag

Not only is the Climate and Transformation Fund unlawful in its current form, the Economic Stabilization Fund is also shaky. In the Budget Committee, experts from the German government point to a possible way out. There is a growing dispute about how to compensate for the definitive shortfall of 60 billion euros.

Almost a full week has passed since the now historic debt brake ruling, but the effects are still not fully foreseeable. This applies equally to Germany's ability to invest in the midst of a recession and to the future of the federal government. The survival of the traffic light coalition depends directly on whether the three-party alliance can agree on a constitutionally compliant path that at least guarantees the financing of the most important projects for more economic growth and climate protection. In this tense situation, the traffic light achieved at least a slight all-clear on Tuesday.

One after the other: Before what is expected to be its last meeting on Thursday on the 2024 budget, the responsible Bundestag committee heard nine professors from the fields of economics and law as well as Jan Keller from the Federal Audit Office. Several experts - especially those invited by the CDU/CSU and AfD - attested that the Federal Government had walked into the current emergency with its eyes wide open.

In fact, the German Federal Audit Office, among others, had already warned in 2022 that unused coronavirus loans, which had been taken out while the debt brake was suspended, would be reallocated to the Climate and Transformation Fund (KTF). The judges in Karlsruhe had declared the use of these 60 billion spread over several years null and void.

Chance of survival for the "double whammy" fund

This results in five major problems for the Ampel: The numerous projects financed by the KTF are in question. Without these funds, the regular debt limit for the coming year will change, which in turn calls into question the almost completed budget. Thirdly, further special funds, primarily the 200 billion euro Economic Stabilization Fund (WSF), which has become known as the "double whammy", could also be illegal. Fourthly, the legality of the 2023 budget is therefore in doubt and, fifthly, that of the 2024 budget as well.

Now for the good news: legal expert Hanno Kube, who represented the 60 billion euro lawsuit for the CDU/CSU in Karlsruhe, agrees with other experts that the WSF is "very, very similar" to the unconstitutional KTF. Here, too, credit authorizations from the 2022 energy emergency are to be used in subsequent years. However: Kube and the lawyer Alexander Thiele, who was invited by the SPD, both assume that the Bundestag could still determine that the economic emergency of 2022 will continue in the current and coming year.

"The need for evidence is high," Kube concedes. And the longer ago the original reason for suspending the debt brake was, the greater the need for proof. The Federal Government would therefore have to prove in the Bundestag - and in case of doubt also before the Constitutional Court - at least this year and next year that the original shock continues to have an effect. In the case of the WSF, this would be the impact of the Russian invasion of Ukraine on the cost of Germany's energy supply. Federal Economics Minister Robert Habeck had already stated that he was prepared for the WSF to be unlawful in its current form. Now that Federal Finance Minister Christian Lindner has imposed the budget freeze, further authorizations from the WSF have also been blocked - apparently on the same assumption.

Lindner's people are listening

At the expert hearing, Lindner's State Secretary Florian Toncar announced that his office would present the committee with an assessment of the consequences of the debt brake ruling by Thursday. However, the experts invited by the Bundestag also wanted to be heard beforehand. The ministry officials will therefore have listened carefully to the fact that Kube and Thiele have pointed out a way to save the WSF by reassessing the emergency situation for the years 2023 and 2024. Henning Tappe, the financial lawyer invited by the Greens, also sees this possibility.

The FDP has no interest in changing the debt rule itself or seeking a new suspension. However, the decision that the consequences of the gas price shock of 2022 continue to this day would be less of a loss of face for the Free Democrats than a complete waiver of the WSF funds: even more than the reallocation of funds in the KTF, the construction of the "Doppelwumms" fund is the responsibility of the current Federal Minister of Finance.

Plus: If the government loses significantly more crisis loans than the 60 billion euros already lost, the FDP would find it even more difficult to avoid an internal coalition debate on reforming the debt brake and possible tax increases. However, there is still at least a residual possibility of financing the up to 20 billion euros missing for the coming year alone from other sources.

Where to save?

The federal government seems to be willing to accept that it will have to amend the budget to be passed this week in the new year by means of a supplementary budget - something the CDU/CSU has warned against. This would allow the federal government to react in January to the currently fluid debt ceiling - the regular upper limit of which is still disputed following the Karlsruhe ruling - and subsequently allocate funds from the regular budget to KTF projects. However, this would mean that savings would have to be made elsewhere first. The coalition wants to reach agreement on this by the end of the year.

How this agreement is to be reached, however, remains unclear for the time being. In the ntv early start, SPD parliamentary group deputy Matthias Miersch called for a special climate protection fund, which would require the agreement of the CDU/CSU, as with the special Bundeswehr fund. SPD leader Saskia Esken pleaded in the Funke media for the debt brake to be suspended again in the current and coming year, which the FDP has so far rejected. Her General Secretary Kevin Kühnert campaigned for a reform of the debt brake, which would, however, also require the votes of the CDU/CSU. Together with the Greens, the Social Democrats rejected proposals from the FDP to cut social spending, such as the citizen's income.

No complaint from AfD and CDU/CSU for the time being

The leadership of the Greens and the Federal Minister of Economics, who is significantly affected by the ruling, will have to answer to their own people on the issue from Thursday. At the Greens' national party conference in Karlsruhe, delegates are expected to insist that their party makes no further compromises on climate protection. The debate on the effects of the debt brake ruling is not scheduled until late on Friday night. In any case, the final decision on the future of the Climate Transition Fund will only be taken after the Green and SPD party conferences (December 8 to 10).

The CDU/CSU and AfD will not take legal action against the WSF in the short term in order to tear it down at the same time as the KTF. The AfD does not have the necessary 25 percent of seats in the Bundestag to bring an action for a review of standards on its own. The CDU/CSU would first like to wait and see how the government reacts.

It is also possible that the conservatives themselves are not entirely comfortable with the economic impact of their successful lawsuit. At the Bundestag hearing, the CDU/CSU parliamentary group invited only one economist among its own three experts: Thiess Büttner expressly welcomed the future validity of the debt brake. However, the economist from the University of Erlangen-Nuremberg was similarly harsh in his assessment of the effects of the loss of the KTF billions for private investments by citizens and companies as Jens Südekum, who was invited by the SPD, and Michael Hüther, who was quoted by the Greens: Büttner spoke of a "shock".

1. The Federal Government is facing major challenges due to the unlawfulness of the Climate and Transformation Fund (KTF) and the shaky Economic Stabilization Fund (WSF).
2. The survival of the traffic light coalition directly depends on the three-party alliance agreeing on a constitutionally compliant path that ensures financing for important projects.
3. Legal expert Hanno Kube suggests that the Bundestag could argue that the economic emergency of 2022 continues to impact the current and following years, potentially saving the WSF from being deemed unconstitutional.
4. The CDU/CSU, along with the SPD and the Greens, will need to reach an agreement on saving funds to amend the budget if necessary, with the FDP expressing no interest in changes to the debt rule.
5. The Federal Constitutional Court could be involved if the government fails to prove the continued impact of the original shock (such as the Russian invasion of Ukraine) on Germany's energy supply and cost.

Source: www.ntv.de