The Federal Constitutional Court announced today the extent to which the reallocation of Corona loans in favor of climate protection measures was permissible. It could be a far-reaching verdict for financial policy.
It was one of the first actions of the traffic light coalition. Shortly after taking office, Finance Minister Christian Lindner announced that 60 billion euros in unneeded Corona loans should instead be used for climate protection measures. “During the coalition negotiations, the three parties SPD, Alliance 90/The Greens and FDP agreed on this procedure,” said Lindner at the time.
In fact, the reallocation of Corona loans for climate protection had already been agreed in the coalition agreement of the traffic light parties – at the urging of the SPD and especially the Greens. They wanted to use billions in funding to make climate protection a core issue of their joint government.
60 billion euros shifted to the climate fund
The legal justification for the reallocation of the debt was: It was about averting the long-term economic consequences of the pandemic; many investments would now have to be made up. So FDP Finance Minister Lindner moved the 60 billion euros in Corona loans to the so-called special climate fund with a supplementary budget.
In doing so, Lindner practically accumulated debt for climate protection. The finance minister benefited from the fact that the debt brake was currently suspended due to the pandemic, which gave Lindner more leeway.
“That’s exactly what the debt brake wants to prevent”
The CDU and CSU filed a lawsuit in Karlsruhe against this action. Union parliamentary group vice-president Mathias Middelberg still considers the rezoning to be highly dishonest and unsound, as he told the ARD capital studio says. “You act as if you are making sound budget policy.” In fact, 60 billion euros in loans are being taken out, which are thematically re-declared from Corona money to climate money in order to be used over several years. “That’s exactly what the debt brake in the Basic Law wants to prevent,” says Middelberg.
Financial politicians in Berlin are now looking with excitement to Karlsruhe. Because 60 billion euros is a lot of money, almost the entire reserve of the 210 billion euro climate and transformation fund KTF, which is largely planned until 2027 – for example to socially cushion the heating law, to build a hydrogen economy and to promote electromobility . The KTF also provides money to promote microelectronics, such as subsidies for the establishment of a chip factory in Magdeburg.
The Green Party leader believes the money is indispensable
From the perspective of Green Party leader Ricarda Lang, the federal government cannot do without the money. “It is very clear that the money budgeted for in the KTF is absolutely needed. They are needed because we have decided to modernize our economy and remain competitive,” said Lang. The question is who will become the first climate-neutral business location. Lang emphasizes that the Greens no longer consider the debt brake to be appropriate. Reform is therefore needed in the coming legislative period.
The coalition partner FDP clearly sees things differently. FDP parliamentary group leader Christian Dürr emphasizes that they will look closely at the upcoming Karlsruhe decision. And the following applies: “Every measure we take must remain within the framework of the debt brake.” The FDP-led Finance Ministry does not want to comment in advance of the Constitutional Court decision.
Fundamental importance for financial policy
Regardless of whether the Karlsruhe judges accept the debt reallocation or not: the decision is likely to contain fundamental statements on how to deal with the debt brake. How creative can budget politicians be with the debt rules? What conditions apply in an emergency situation in order to be able to suspend the debt brake? What role can the so-called special funds play – i.e. additional budgets that have become increasingly important in recent years?
Financial scientist Thiess Büttner from the Friedrich-Alexander University Erlangen-Nuremberg believes that clarification from the court is urgently needed. “It is unacceptable that the federal budget approved by Parliament is subject to strict limits and that the federal government can distribute subsidies in almost any amount in shadow budgets free of such restrictions and finance them through debt.” Büttner is also the head of the advisory board of the Stability Council, an official body that is supposed to monitor the budget management of the federal and state governments.
The finance ministers of the federal states are also likely to look to Karlsruhe with interest. There, too, more and more special funds are being set up in order to create financial leeway, especially for climate protection investments – creative budget management right at the limit or beyond the limit of the debt brake.