17 billion euros – that’s how great the “need for action” is for the coming year, says the finance minister. In the tug of war with the coalition partners SPD and Greens, he is now becoming a little more specific.
Federal Finance Minister Christian Lindner has specified in which areas he believes savings are possible in order to close the gaps in the budget for 2024. “We will have to deal with three major cost blocks,” the FDP politician told the newspapers of the Funke media group. He mentioned the areas of social affairs, including citizens’ money, international financial aid and unspecified funding programs.
But the coalition partner SPD doesn’t just want to talk about savings, but is also questioning the agreed waiver of tax increases. SPD chairman Lars Klingbeil told the German Press Agency that it was agreed in the coalition agreement that investments in the country’s future should be financed with money from the Corona pot.
“It was deduced from this that we are returning to normal with the debt brake and that there is no need for a tax increase.” The former was broken by the ruling of the Federal Constitutional Court. “For us as the SPD, that of course also means that we are now talking about the other two things.”
Klingbeil promised difficult conversations. Currently these are mainly taking place in a three-way round with Chancellor Olaf Scholz (SPD), Vice Chancellor Robert Habeck (Greens) and Lindner. The pressure is great: the coalition must reach an agreement within the next few days if it wants to decide on the budget for 2024 this year.
What the finance minister is planning to do now – and what others want:
Social sector: labor market
The federal government currently spends 45 percent of its spending on social issues. “We will see how we can become more accurate,” announced Lindner. “For example, it’s about getting people into work more quickly. That benefits people and that benefits the federal budget. For example, there is a job boost for the refugees from Ukraine.” This probably means that they should be placed more persistently on the job market.
Social sector: Citizens’ money
With regard to citizens’ money, the Finance Minister pointed out that the inflation rate is developing significantly better than predicted when the standard rate was set for 2024. Inflation fell to 3.2 percent in November – the planned increase in citizens’ benefits from January is still based on inflation of 9.9 percent, as the social policy FDP parliamentary group spokesman Pascal Kober made clear.
Lindner said: “When examining the gap between wages and social benefits, we will therefore have to look at the adjustment process. Because it always has to make a noticeable difference whether someone works or doesn’t work.”
However, the head of the CDU employee association CDA, Karl-Josef Laumann, rejects the cancellation of the citizen’s benefit increase – as demanded by the Union and the FDP. “It was urgently necessary to adjust the standard rates for citizens’ benefit,” said the North Rhine-Westphalian Minister of Social Affairs to the Editorial Network Germany (RND). However, he questioned whether high earners are supported with gas and electricity costs or with house renovations or solar systems.
International financial aid
Germany is at the forefront when it comes to development cooperation and international climate protection financing, said Lindner. “We can happily stay in first place. But perhaps the gap to second place can be reduced.” The aim could be a “fairer international burden sharing”.
“There are numerous subsidies for which the question must be asked whether they actually meet their goals or whether they are out of date,” explained Lindner. But it is still too early to name individual programs. “Otherwise this will lead to a run on funding programs at the last few meters.”
What Lindner wants to exclude from savings:
There should be no cuts in the Bundeswehr in view of the changed threat situation since the Russian attack on Ukraine. “The defense budget remains untouched,” assured Lindner.
Lindner is also generally sticking to this FDP project: Next year, twelve billion euros will be invested in building up the planned capital stock. “This is not relevant for the debt brake because the payment is offset by an asset.” The capital stock should be built up piece by piece from public funds; in the longer term, its income should then stabilize pension contributions and the pension level.
Education Minister Bettina Stark-Watzinger, a free democrat like Lindner, would also like to see the federal and state governments’ planned starting opportunities program for hotspot schools exempt from savings considerations. “I have no doubt that the program will start as planned for the 2024/25 school year. It is an investment in the future,” she told the “Neue Osnabrücker Zeitung” (NOZ). 20 billion euros are expected to flow towards it over ten years.
Why savings need to be made
The Federal Constitutional Court had declared the reallocation of 60 billion euros in the 2021 budget to be null and void. The money was approved as a Corona loan, but was subsequently intended to be used for climate protection and the modernization of the economy. At the same time, the judges decided that the state was not allowed to set aside emergency loans for later years. But the federal government did this in special funds – which is now tearing additional holes in the budget. Lindner sees a “need for action” of 17 billion euros for 2024.
More income – without a debt brake?
An emergency should be declared again for 2023 and the debt brake should be suspended; the Union does not want to stand in the way. Reason: the ongoing energy crisis after the Russian attack on Ukraine. Klingbeil also wants this for 2024: “There has to be savings from the federal government. But in the end I am of the firm political conviction: We have to declare an emergency for 2024 because I don’t want to get into a situation where we play off aid to Ukraine against climate investments “, he said.
But Lindner is very skeptical about this. “I am not yet convinced that a new suspension can be justified in a constitutionally viable manner,” he confirmed in the Funke newspapers.
The Union should also be in front of it. “If the traffic light creates a new emergency situation, we will examine it and almost certainly sue,” said Christian Democratic Budget Committee Chairman Helge Braun to “Welt am Sonntag”. There is currently no reason and no constitutional possibility to present a budget for 2024 that falls outside the classic debt rules.