analysis
The government is deep in the budget crisis – and Minister Lindner and Chancellor Scholz initially make brief statements without answering pressing questions. How is the traffic light going to get out of there?
Even on the ninth day after the Federal Constitutional Court’s groundbreaking ruling on the federal government’s debt policy, the consequences for federal and state budgets can only be roughly foreseen. One thing is clear: the public sector will have to save money if it wants to stick to its political goals and at the same time meet the strict fiscal criteria of the Karlsruhe judges.
The confusion that the Supreme Court’s decision has caused among those in power is also clear from the fragmented communication from the traffic light coalition.
In his video message on Friday afternoon, the Chancellor took almost three minutes to address the pressing questions of citizens: What is the state of government finances now? What does the budget crisis mean for each individual? However, Olaf Scholz failed to provide any concrete answers – he only repeated the federal government’s oft-cited goals of helping Ukraine, capping high energy prices, strengthening social cohesion in the country, advancing climate protection and digitizing the country.
Where exactly the federal government wants or needs to save in order to plug the tens of billions hole after the Karlsruhe decision – the Chancellor did not provide this information to his audience. At best, his concern for social peace within society can be interpreted as a response to the recently louder demands from the Union, but also from his own coalition partner FDP, to put the red pencil in the budget restructuring, including social spending. Nothing more could be gleaned from this short message on the mega-crisis.
Lindner avoids the word “debt brake”
At least the Chancellor spoke for more than twice as long as his Finance Minister Christian Lindner, who took a full 70 seconds the day before for his dry and unsurprising declaration that there would now be a supplementary budget for the current year, especially for the budget The Federal Government’s Economic and Stabilization Fund (WSF) aims to put electricity and gas price brakes on a constitutionally secure footing for consumers and companies.
In other words: The coalition wants to declare an economic emergency via the supplementary budget in the Bundestag for 2023 and use this lever to abolish the debt limit of the Basic Law. The federal government could then take out fresh loans and use them to cover energy aid. This is actually nothing more than a rebooking – because the WSF also consists of credit authorizations, i.e. additional debts. But now they should come from the regular budget – Karlsruhe wants it that way.
What struck observers as remarkable, however, was that Lindner rhetorically avoided the word “debt brake” in his short statement – what a surprise, since compliance with this requirement of the Basic Law is part of his political DNA.
In the 2021 federal election campaign, Lindner had already campaigned with the central promises of wanting to limit the federal government’s borrowing at the expense of future generations – and to rule out tax increases. A promise that the Federal Minister of Finance has been able to keep on paper anyway since the billion-dollar transactions into the federal government’s special funds.
Lindner throws the state secretary out the door
The FDP leader’s intention to consolidate did not fail with the Karlsruhe ruling, but rather with a coalition agreement two years ago that was intended to satisfy the different political goals of the three traffic light parties with lavishly filled “special assets” – in reality, pots of debt.
This Friday, Christian Lindner kicked out his Budget State Secretary Werner Gatzer (SPD) – which can be interpreted as an external sign of a new beginning in the Federal Ministry of Finance. Gatzer was considered one of the most influential political officials in Berlin; he served under Federal Finance Ministers Peer Steinbrück (SPD), Wolfgang Schäuble (CDU) and Olaf Scholz (SPD). With the dismissal, Lindner probably wants to send the signal that a social democratic-influenced – i.e. debt-friendly – way of thinking no longer has a chance in his company: You can also communicate through ties.
End of a win-win-win situation
Anyone who interprets the Karlsruhe ruling in such a way that the Greens’ ambitious climate protection goals can no longer be financed and that the FDP’s savings goals are now actually being met is not looking at things from all three sides.
Of course, the financial blessing from the special funds also took the pressure to restructure out of the regular federal budget. And the Chancellor’s SPD party in particular had a massive interest in this: it was able to further postpone long-overdue social reforms, for example in pensions, and even incorporate additional benefit promises into the system with the “basic pension” from Social Minister Hubertus Heil. The federal budget contributes more than 100 billion euros annually to statutory pensions – no other item in the budget has anywhere near this weight. So it was a win-win-win situation in which the party leaders of the SPD, Greens and FDP decided to use the accounting trick to reallocate unneeded Corona funds to the area of climate protection.
Households everywhere sewn on edge
And the Union? She also needs time to realize what exactly she has started with the lawsuit in Karlsruhe. “I would never have expected how far the decision would go,” said CDU party and parliamentary group leader Friedrich Merz in the ARD-Broadcast Maischberger – because the judgment does not only affect the current federal government and the current electoral period.
How true: Karlsruhe’s demands for a sustainable budget policy will make governing at the federal and state levels more difficult in the foreseeable future. Because households everywhere are stretched thin, and it is often only by taking on new debt that they can secure some residual political ability to act.
Union-led states such as Berlin, North Rhine-Westphalia and Hesse have also set aside special funds in order to be able to pay the additional burdens of their climate protection tasks. The governing mayor of Berlin, Kai Wegner (CDU), has already made critical comments about the continued existence of the debt brake – his own financial woes are apparently closer to him than the official line of the federal party.
There is a lot of explaining to do for Chancellor Olaf Scholz, who will make a government statement on Tuesday next week. With a length of just under three minutes and vague promises like his video message, he won’t get by in the Bundestag. And above all: The opposition will use the biggest budget crisis since the Federal Republic’s existence to settle accounts with a hopeless traffic light coalition. Because the Karlsruhe ruling calls for nothing less than a turning point in budget policy.