analysis
After the end of the summer break, Finance Minister Lindner is presenting the draft budget for 2024 to the Bundestag today. The budget should comply with the debt brake – there is little room for additional requests.
Finance Minister Christian Lindner last ARD summer interview made it clear on Sunday what the 2024 federal budget is intended to achieve: a return to fiscal policy normality after years of running into debt. “The deficits are too high. We have crisis measures that have driven up the debt,” said the FDP politician. It’s now about consolidation.
In Lindner’s draft budget, expenditure of a good 445 billion euros is planned for the coming year, around 30 billion euros less than this year, but still around 90 billion euros more than 2019 – the last budget before Corona. Then came the pandemic and energy crisis caused by the Russian war in Ukraine. The federal government suspended the debt brake from 2020 to 2022 and took out loans like never before. In the regular budget and in various so-called special funds, i.e. sub-budgets with additional loans worth billions.
Almost all departments have to save
In the coming year, all departments except for the Ministry of Defense are to make savings. The budget spokesman for the SPD parliamentary group, Dennis Rohde, has been on the Budget Committee of the German Bundestag for ten years. “This is by far the most challenging budget we’ve ever had,” he says. Many things have to be questioned so that the debt brake can be adhered to in the end. “It is important to us that in the end internal, external and social security is maintained. And I see that in this budget.”
Large amounts of savings result from the fact that the federal government is reducing the subsidies for pension and long-term care insurance. In addition, very high earners should no longer receive parental allowance.
But there are also additional spending requests: the citizen’s income is to be increased, which is only partially taken into account in the draft budget. Federal Minister of Labor Hubertus Heil expects total costs of 4.3 billion euros.
The gastronomy is fighting against the return to the full VAT rate in the coming year. Retaining the reduced rate would mean a good three billion euros less revenue for the state. The energy-intensive industry demands state aid or tax relief for electricity costs. Depending on the design, that would also be a multi-billion dollar item for the budget. And finally, the long-fought basic child security must also be backed up with specific figures as far as financial planning up to 2027 is concerned. From 2025, the basic child security is to be paid out.
The debt brake is in place
But there is little scope for all of this because of the debt brake enshrined in the constitution. And for the budgetary spokesman for the FDP parliamentary group, Otto Fricke, compliance with them is a basic prerequisite for financial policy: “The debt brake is the guarantee that later generations will not be burdened with interest and compound interest in their future in such a way that they will not feel like our generation then we can only say thank you.”
In contrast, the SPD and above all the Greens keep saying that the future needs investments. Some in the traffic light would like to suspend the debt brake again because it only allows for very limited borrowing. The argument goes that significantly more money is needed for infrastructure or climate protection.
But the debt brake is in place – especially since the FDP and Chancellor Olaf Scholz do not want to shake it. The budget spokesman for the Greens, Sven-Christian Kindler, currently sees no prospects for a change in the debt brake. “We don’t have a majority for this either in the coalition with the SPD and FDP and we don’t have a constitution-amending majority with the Union at the current time,” said Kindler. The demand will not be given up because of this. “But the Basic Law and the prescribed debt brake apply to the current deliberations.”
While some would like to soften the debt brake, the Federal Court of Auditors criticizes the fact that Finance Minister Lindner is glossing over the true extent of the debt through the many billions of special assets. If you add up all the sub-budgets, the debt would be around four times higher than that shown in the regular federal budget.
budget consultations of the Bundestag until November
Christian Haase, the budget spokesman for the Union faction, complains that the numbers are not clear: “You no longer have an overview. It’s becoming increasingly difficult for us to explain to the people outside or in the faction that only a part is shown in the main budget.”
Lindner emphasizes that the special funds should also be reduced – in particular the Economic Stabilization Fund WSF, which should cushion the rigors of the energy crisis with up to 200 billion euros. This framework will not be exhausted, said the FDP politician ARD summer interview.
Economics Minister Robert Habeck, on the other hand, would like to use WSF funds to finance a subsidized industrial electricity price. But the Green politician lacks the support of Chancellor Scholz.
The presentation of the draft budget is followed by months of parliamentary budget deliberations. It is already clear: the fat years in fiscal policy are over. The budget keeper will try to make a few adjustments to the budget until mid-November. But the framework is set.