Thuesday
November 21, 2023
Less than a week has passed since the German Constitutional Court’s ruling against the reallocation of €60 billion, and the political consequences are dramatic.
The Treasury Department this week ordered a temporary budget freeze for nearly the entire federal budget. It put an end to all governments for departments to incur payment obligations for years in the long term. This year’s expenses are affected. According to Reuters and Der Spiegel, only a few spaces are exempt from the ban, such as the German Parliament and the Federal Constitutional Court.
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The ministry’s spending cuts will further fuel ongoing discussions in Germany and within the tripartite coalition on how to close the €60 billion deficit.
Since the ruling, ideas on how to cover the new budget cap have varied among the coalition partners of the Social Democrats (SPD) with their chancellor Olaf Scholz, the Greens and the Liberals (FDP).
Last week, the Federal Constitutional Court annulled a €60 billion extra-budgetary government fund for climatology. According to the ruling, the German government has not reallocated the budget earmarked for the fight against the Covid pandemic to a special climate fund.
The German government had reallocated this sum to weather policy because it was being used to combat the pandemic. The German parliament, the Bundestag, had given the green light to the reallocation.
But the opposition party, the Christian Democrats (CDU), filed a complaint.
The true dimensions of this court ruling are not yet foreseeable even for the academics or politicians concerned. This may affect other budgets as well.
To get a clearer idea of how exactly to interpret and apply the court decision, the German Parliament’s budget committee will hold a hearing with outside monetary experts on Tuesday (21 November). Experts are also expected to answer the question of whether next year’s budget can be approved under the new circumstances.
The three-party coalition has been divided lately over how to save €60 billion.
FDP chairman in the Bundestag, Christian Dürr, sought to save money where citizens have less of a political voice. He advised cutting social benefits, which provoked a strong reaction from the SPD and the Greens.
SPD secretary Kevin Kühnert accused the FDP of abusing the ruling for “a political crusade contrary to social justice. “
And the Greens rejected this idea as well. ” From our point of view, a reduction in social spending is out of the question because it would jeopardise social cohesion, especially in times of peak inflation,” said Greens Bundestag President Katharina. The Greens prefer to abolish environmentally harmful subsidies, such as tax exemptions for the personal use of company vehicles or subsidies for diesel fuel.
And Dröge, together with the Greens, have come out in favour of a second look at what is the FDP’s holy grail: the suspension of the so-called debt brake.
This instrument, developed in 2009 after the monetary crisis, establishes safe spending limits. Only in emergency situations, such as the Covid crisis, can this debt brake be suspended. The FDP is a strong advocate of a strict debt brake and has insisted on it. point in the debate about where to save the 60,000 million euros.
Some politicians from the SPD and the Greens see the time to modify or at least temporarily suspend the instrument. SPD chairman Rolf Mützenich has come out in favour of postponing the debt brake until at least 2024, “or even longer”.
And Green Economy Minister and Vice Chancellor Robert Habeck told German television on Monday that he believed the debt brake was “not smart enough” as a mechanism because it would not differentiate between cash spent during the year and investments. pay until later.
At the same time, he stated that removing or modifying the debt brake would be constructive, as there is no agreement within the coalition. “For the time being, we’ll have to put the money somewhere else,” he said.
While the coalition searches for solutions, the opposition Christian Democratic Union (CDU) is up in arms.
But despite internal coalition divisions and enemy fire from the CDU, it seems that the ruling coalition (Red/Yellow/Green) is not going to implode. Not even the leader of the CDU, Friedrich Merz, accused of populism, has called new elections.
However, for the CDU and its Bavarian sister party, the CSU, the new clash within the coalition is cause for celebration. Although they have not taken legal action, the coalition’s reputation, already degraded in opinion polls, is once again tarnished.
This comes shortly after the Bundestag passed a new “green” heating law in September aimed at phasing out oil and fuel heating systems, but only after months of public discussion on the issue between the SPD, the Greens and the FDP.
Marion Bergermann is a journalist in Brussels covering European politics.
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