At 12 noon today, Finance Minister Christian Lindner (FDP) will step onto the podium in the Bundestag to defend his budget for the coming year. High noon in parliament – that fits the drama surrounding this budget, which some even feared could blow up the traffic light government. After the hard-won compromises, it doesn’t look like that at the moment – but the question remains: is the traffic light coalition overstepping the limits of what is permissible with its budget?
The key figures
The traffic light government plans to spend almost 490 billion euros next year, more than a tenth – 51.3 billion to be precise – of this on credit. According to the Basic Law, this is possible despite the debt brake, partly because the economy is faltering.
The Ministry of Finance has allocated 81 billion euros for investments – a record level. The largest item among the ministries is by far the social budget. 179 billion euros have been earmarked for this, but a large part is already tied up in legally guaranteed benefits – such as the citizen’s allowance.
The contents
With its budget, the traffic light coalition is trying to stimulate the economy, maintain social benefits, ease the burden on taxpayers and do justice to the tense international security situation. But there is particular criticism of the budget for Defense Minister Boris Pistorius (SPD). Although he is to receive 1.3 billion euros more than last time, this is significantly less than he had actually asked for.
For families, the budget includes a five euro increase in child benefit from January. The child supplement, which provides additional support for families with low incomes, is also set to increase. Tax allowances will also be increased. Improved depreciation arrangements and relief on electricity prices are planned for companies. There will be tax incentives for foreign skilled workers.
The helplessness of the traffic light
But all of this cannot disguise the fact that the traffic light leaders are ultimately presenting an unfinished budget. Their calculations only work because Chancellor Olaf Scholz (SPD), Vice Chancellor Robert Habeck (Greens) and Finance Minister Lindner show enormous courage to leave gaps.
Until the end, the three were unable to agree on how existing funding gaps should be filled – so blanket savings and additional revenues are now planned, and no one yet knows how they will be covered.
The debt brake is only being complied with because planned subsidies to the railways were converted into an equity injection, which does not count in the calculation.
The risky “post of hope”
The traffic light coalition is also planning a very high global spending cut of 12 billion euros. It is betting that the ministries together (hence “global”) will have 12 billion euros of their budget left over at the end of the year because projects fail or subsidies are not claimed. That would be quite a lot, as constitutional lawyer Hanno Kube writes in a report commissioned by the opposition Union. The sum is “well above past experience”. The Finance Ministry is talking about the largest funding gap in a government bill in the past twenty years.
The federal government hopes to be able to reduce this gap by winter – possibly through growing tax revenues and better prospects for the economy. But that is extremely uncertain. Just like the assumption that more people receiving the citizen’s allowance will work in the future and be less dependent on the state. And the assumption that the planned growth package for the economy will lead to around 6.9 billion euros more in tax revenue. The most important measures have not even been decided yet.
The Union therefore expressed considerable constitutional doubts about the budget. “The budget balance is being tricked into being in order to survive the legislative period and not to endanger the party’s own pet projects, regardless of how many budget principles are violated in the process,” says chief budget officer Christian Haase.
The AfD also criticizes the draft as being dubious. Expenditure is “consistently, systematically underestimated” and revenue is “consistently overestimated.” The Taxpayers’ Association also speaks of “budgetary tricks” and “hopeful items” in the planning that are not backed up.
The dissatisfaction of the coalition partners
The Taxpayers’ Association believes that parliamentarians will have to completely rewrite the draft budget in the coming weeks. That is unlikely, but not everyone in the coalition is happy with the figures either. The Greens’ budget officer, Sven-Christian Kindler, stressed immediately after the cabinet decision: “No law passes through the Bundestag without changes.” His group is upset, for example, that despite global crises, cuts are being made to humanitarian aid and development cooperation. In general, the Greens would like to invest much more and loosen the debt brake to do so. They would have the SPD on their side for this – but that is not enough.
The SPD budget officer Dennis Rohde also made it clear in interviews with “Welt”, RND and “Stern” that he still expects proposals from the government to reduce the financing gap to under ten billion euros. FDP parliamentary group vice-chairman Christoph Meyer called the need for action of 2.4 billion euros “manageable”. If the budget is approved with a slightly higher reduction in spending, this would still be “within the bounds of what is reasonable”, Meyer said in the newspapers of the Funke media group. That would be “no big deal”, said economist Jens Südekum at the RND.
It is also highly controversial that four billion euros have been earmarked for aid to Ukraine. That was the case last year, too, and then the Bundestag added another four billion. The budget makers do not see such leeway this time – but it could be that they will increase the amount anyway. At the same time, the federal government is hoping that a new international financing concept for Ukraine will be ready in time: the country attacked by Russia is to receive a loan of 50 billion dollars, the interest and repayment of which will be covered by the proceeds of frozen Russian state assets.
The schedule
After the first budget week, the budget officers of the Bundestag factions take a detailed look at the budget and check where changes are sensible and possible. This is then finalized in the budget committee’s reconciliation meeting planned for November – the legendary showdown that usually goes on until the early hours of the morning.
The amended budget draft will then go to a second budget week in parliament, at the end of which the decision will be taken. This is currently planned for the end of November.
© dpa-infocom, dpa:240910-930-228002/1
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