Why the 60 billion hole is a disaster - for all of us
The two basic questions of any modernization policy are: Where does the money come from? And does society want it at all? Following the ruling of the Federal Constitutional Court, both questions are now unanswered.
Of all things, the old "Groko" has once again become the ideal for many Germans. In other words, the governing alliance that is ultimately responsible for the modernization backlog that the traffic light coalition is currently stumbling over. The projects that were to be financed by the Climate and Transformation Fund (KTF), which was stopped by Karlsruhe, have two things in common: they are now on the brink of failure. And they should have been initiated years ago - no, they should have been.
Climate and transformation policy is now as popular as athlete's foot. The fact that too little has been invested in analog and digital infrastructure over the years, that many schools are in an embarrassing state, bridges are dilapidated, railways are not passable and wind turbines have not been erected in sufficient numbers - from many people's point of view, none of this is apparently as bad as the debt brake cast in concrete and the desire for calm in the governing coalition.
The balanced budget was so important to the "Swabian housewife" that she didn't notice how her home was becoming increasingly run-down. But true Swabians know that property needs to be looked after. There is now a shortfall of 60 billion euros for this maintenance, perhaps more if the CDU/CSU also takes legal action against the Economic Stability Fund, as threatened yesterday, and this then also turns out to be unconstitutional. That would be a disaster - for all of us.
Those responsible for the traffic light are completely unprepared
Not only has the traffic light party inherited a difficult legacy, it has also turned out to be just as badly divided as had been feared. It is true that the general condemnation of the Ampel's work is not fair: securing the energy supply last winter, the Germany ticket, the 12-euro minimum wage, the ramping up of the energy transition, the hesitant but unprecedented support for Ukraine - all these are just examples of the many things that this coalition did right.
However, this will now fade into the background. The ruling by the Federal Constitutional Court on Wednesday clearly caught those in charge of the coalition completely unprepared. In one fell swoop, they have lost the central financing instrument for funding their climate protection and modernization projects. Marcel Fratzscher, head of the German Institute for Economic Research, does not expect any immediate problems because "there is still enough money available in the climate and transformation fund", as he wrote on X (formerly Twitter). Finance Minister Christian Lindner said yesterday that measures to promote energy efficiency and renewable energies in the building sector were exempt from the freeze on KTF funds that he had imposed; subsidies for replacing heating systems will therefore still be available in the coming year. And Federal Building Minister Klara Geywitz from the SPD stated that her government's funding programs, such as climate-friendly new builds or home ownership funding for families, were "not affected this year" by the ruling.
Nevertheless, the policies of the traffic light government have been subject to a massive funding proviso since yesterday. Fratzscher therefore hopes that the ruling will lead to a reform of the debt brake: "It is not in keeping with the times because it deprives politicians of the leeway they need to combat crises and make urgent investments in the future - in education, climate protection, innovation and infrastructure."
Debt brake remains the big taboo
Fratzscher is not the only one to see it this way; Michael Hüther, head of the German Economic Institute, which is close to employers, also considers the debt brake to be "out of date". The transformation to climate neutrality requires other solutions - "for reasons of efficiency and intergenerational justice". The head of the IW calculates that there is scope for this: even if the debt brake were raised from 0.35 to 1.5 percent of gross domestic product, German national debt would fall significantly. "This would allow additional debt of around 50 billion euros in the coming year alone without jeopardizing the sustainability of public finances."
However, this will not be possible with either the FDP or Chancellor Olaf Scholz, and even a CDU/CSU-led government would shy away from reforming the debt brake like the devil shuns holy water - the political debate surrounding the issue is too poisoned. CDU leader Friedrich Merz has already announced that the CDU/CSU will "not agree" to a relaxation of the debt brake.
The CDU/CSU and FDP can hope to be rewarded in the polls for their stance on the debt brake. The traffic light government's policy of using budgetary tricks to create leeway for modernizing the country has been a resounding failure. Whether it will survive the upcoming conflicts is uncertain - whether a successor government will find the strength to pursue a sustainable modernization policy is even more uncertain. This is where the catastrophe lies. Politics has talked itself into a dead end.
- Despite the rising popularity of the Grand Coalition under Angela Merkel, the current traffic light coalition is struggling with a modernization backlog, particularly in climate and transformation policy, due to the ruling of the Federal Constitutional Court stopping the Climate and Transformation Fund (KTF).
- Friedrich Merz, the leader of the CDU/CSU, has stated that they will not agree to relaxing the debt brake, a position that could potentially gain them support in the polls. This stance has made it difficult for any government, including the traffic light coalition, to pursue a sustainable modernization policy.
- The ruling by the Federal Constitutional Court has placed a massive funding proviso on the policies of the traffic light government, forcing them to reconsider their approach to the debt brake and potential budgetary tricks. Olaf Scholz, the chancellor, and Christian Lindner, the finance minister, have indicated that certain renewable energy and energy efficiency measures will still be funded, but the broader impact of the ruling remains uncertain.
- The opposition, including figures like Friedrich Merz, have argued that the debate surrounding the debt brake is poisoned, making any reforms difficult to achieve. Michael Hüther, head of the German Economic Institute, has suggested that a relaxation of the debt brake is necessary for efficient and intergenerational justice in addressing climate neutrality, but this idea has not gained traction in political circles.
Source: www.ntv.de
