After the ruling on the climate fund, the traffic light government is missing 60 billion euros. But the consequences are even more serious: the 200 billion euro economic stabilization fund is also likely to be affected by the ruling.
Today, Federal Minister of Economics Robert Habeck, a high-ranking government representative, publicly stated exactly what has been discussed by constitutional lawyers and economists for days: The consequences of the Karlsruhe ruling on the unconstitutional supplementary budget for 2021 and the debt brake are much more heated than has been widely discussed so far. So far it has mainly been about a financing gap of 60 billion euros. Loan authorizations from the Climate and Transformation Fund (KTF) may no longer be used at this level.
Now there are problems with the Economic Stabilization Fund (WSF). Habeck said today Deutschlandfunk, all other federal special funds are also affected by the ruling. This also applies to the WSF. As a result, consumers and companies may have to prepare for higher electricity and gas prices.
In principle, the following applies: According to the debt brake in Article 115 of the Basic Law, the federal government is only allowed to take on exceptionally high debts in emergency situations. The WSF was set up in 2020 to cushion the economic and social consequences of the corona pandemic. In 2022, after the war in Ukraine broke out, the purpose of the fund was expanded: It should now also help to better deal with the consequences of the energy crisis.
The WSF, the so-called “double oomph”, was authorized at the end of 2022 to take out up to 200 billion euros in loans on the capital market. Since then, the WSF has been using this money to finance, among other things, the current electricity and gas price brakes. In 2022, the legislature declared an emergency in order to be able to deviate from the strict debt brake.
Strong similarities with the KTF climate fund
If you take a closer look at the WSF, you will see that it is quite comparable to the climate and transformation fund KTF, whose design the Federal Constitutional Court declared unconstitutional. One of the points of criticism from Karlsruhe was: At the KTF, the traffic light government had set aside credit authorizations amounting to 60 billion euros, which were originally intended to deal with the corona pandemic, in reserve for the following years.
The loans should be used for climate protection projects over several years. The Constitutional Court ruled that this approach violated the debt brake regulations in Article 115 of the Basic Law. Experts speak of an “annuality principle”: loans must be accessed in the year in which they were made available.
The same problem now arises at the WSF: There, too, a large part of the credit authorizations were stored in reserve for the following years. In the current 2023 budget year, the WSF has so far provided around 32 billion euros in energy aid for consumers and companies. Next year, more money will flow and loans will be taken out for this purpose.
Constitutional lawyers consider this to be extremely problematic after the Karlsruhe ruling, such as the Berlin constitutional lawyer Alexander Thiele. He represented the traffic light government as legal counsel before the Federal Constitutional Court. Thiele said ARD legal editorial teamthe WSF is constructed similarly to the KTF climate fund, precisely because it provides funds for subsequent years. The federal government must therefore check whether the WSF’s billion-dollar loan authorizations can no longer be taken into account.
The Heidelberg constitutional lawyer Hanno Kube, who represented the plaintiff CDU/CSU parliamentary group before the Federal Constitutional Court, comes to a similar conclusion. He also sees constitutional problems because the majority of the credit authorizations at the WSF were kept in reserve. “According to the ruling of the Federal Constitutional Court, the funds must always be used in the same year for emergency loans, otherwise they expire,” said Kube. Based on this, all credit authorizations in the WSF would have expired at the end of 2022.
Serious consequences for the federal budget
It will now be exciting to see how the federal government will deal with the problem. If it also comes to the conclusion that the WSF in its current form is no longer constitutionally tenable, this would have serious consequences for the current federal budget. The approximately 32 billion euros that the WSF made available this year would have to be financed from other sources.
Given the current situation – assuming the WSF is unconstitutional – borrowing of this amount would not be possible because the government would violate the debt brake. It is not allowed to deviate from this at the moment because – unlike 2022 – the legislature has not declared an emergency for 2023. And only in an emergency can the debt brake be deviated from. Until now, Federal Finance Minister Christian Linder FDP had always declared that he wanted to comply with the debt brake in 2023.
The way out of the mess: the Emergency clause?
The SPD party leader Saskia Esken has now advocated declaring an emergency again for 2023 and 2024 so that the debt brake does not have to be observed. Constitutional lawyer Alexander Thiele considers the use of the emergency clause to be at least a conceivable alternative: “One option would be to say: We still have an energy and economic crisis due to Putin’s war of aggression.” According to constitutional lawyer Hanno Kube, this currently appears to be the only realistic way to close a budget gap of 32 billion euros this year. In this case, the traffic light coalition would have to decide on a corresponding supplementary budget by the end of the year.
But simply declaring an emergency in order to be allowed to incur significantly more debt is not a sure-fire success, according to the Federal Constitutional Court’s ruling. This is linked to high hurdles, says Kube. The federal government would have to explain and justify very carefully what the emergency situation should consist of. The federal government would also have to explain what the connection is between the declared emergency and the financed measures. The requirements for the obligation to provide reasons are enormous, as constitutional lawyer Thiele also told the ARD legal editorial team.
New lawsuit filed Federal Constitutional Court conceivable
However, if the traffic light coalition decides to actually make use of the emergency clause, this could result in another lawsuit before the Federal Constitutional Court. CDU leader Friedrich Merz had already threatened to have the WSF reviewed by the Constitutional Court because the fund’s borrowings did not comply with constitutional requirements.
The Union faction also believes that suspending the debt brake again in 2023 is unconstitutional. The budget spokesman for the Union parliamentary group, Christian Haase, told the Handelsblatt that an unconstitutional approach at the WSF was obviously intended to be cured by further unconstitutional behavior.