The political emergency in view of this year’s and future federal government budget is also on the minds of Anne Will’s guests this Sunday. Where can savings be made? Is there a lack of money at all? And what does the future of the debt brake look like? The discussion is lively.
Two minutes and 47 seconds. This is how much time Chancellor Olaf Scholz has taken so far to address the citizens of Germany in light of the groundbreaking ruling by the Federal Constitutional Court. The Video statement Friday is essentially a teaser for what the Social Democrat will say in his government statement in the Bundestag on Tuesday. To date, however, the impression remains that the head of government is unable to provide the people in his country with the explanations that they rightly expect.
“The uncertainty is enormous, among citizens, but also among companies,” says journalist Ann-Kathrin Büüsker on Sunday evening on “Anne Will”. “I think very few people realize what’s at stake right now.” The Climate and Transformation Fund (KTF), which was reduced by 60 billion euros by the judges in Karlsruhe a week and a half ago, affects many areas of life. At the moment, companies cannot rely on the investments they want to make in Germany to be supported, says Deutschlandfunk’s capital city correspondent. This is an enormous problem and the government’s communication is a “disaster”.
Her colleague Julia Löhr, who is also a guest on the talk show, agrees. The communication was “terrible”. “We have a chancellor who is largely silent. An economics minister who talks at length and blames the Union. And we have a finance minister who has to be translated by his press spokeswoman afterwards because no one understood his statement,” sums up the business correspondent for the “Frankfurter Allgemeine Zeitung”. Büüsker says that no one in the government seemed to have been prepared for the worst-case scenario – namely the devastating ruling of the Federal Constitutional Court and the resulting imbalances in budget planning. “I think that’s negligent.”
SPD chairman Lars Klingbeil is trying to counter the fact that the government was caught off guard and the Chancellor didn’t communicate enough. Scholz will explain himself to those who will ultimately pass the budget on Tuesday. The representative of the traffic light coalition in the discussion group quickly tries to shift the focus away from past failures and towards future potential. He decisively rejects corresponding questions from moderator Will. The government’s job must now be to clarify what will happen with the expected investments.
Haseloff: Prevent reputational damage
At the federal level, the Union is currently taking a stand when it comes to reforming the debt brake. The country leaders there recently appeared more willing to compromise. Reiner Haseloff is an experienced and pragmatic representative in the ARD studio. “It must not be the case that this budget emergency turns into a national crisis,” says the CDU politician, referring to the state and local elections next year.
He is also particularly interested in quickly finding a solution to the billion-dollar hole in the KTF: a chip factory made by the manufacturer Intel is to be built in Magdeburg and will be funded by the federal government with ten billion euros. He and his Saxon Prime Minister colleague Michael Kretschmer received a promise from Scholz himself that the projects would come to their federal states – the Taiwanese semiconductor giant TSMC is based in Dresden, Saxony. Anything else would be damage to Germany’s reputation that could not be repaired, said Haseloff.
The people in Saxony-Anhalt are known as early risers. It’s no surprise that Haseloff and lawyers he knows said they predicted the failure of the KTF special fund last year. At least for this year there seems to be a quick solution to the misery: As in previous years, the federal government is declaring an emergency and suspending the debt brake. For Haseloff, this is a legitimate means.
The Prime Minister sees the country in a permanent emergency situation due to the aftermath of the Corona crisis, the financial needs of war-torn Ukraine and the situation in the Middle East. This would pave the way for a suspension of the debt brake in the 2024 budget. Lars Klingbeil basically says about the emergency situation principle: “If this path can be taken, then it should be taken.” At the same time, he is in favor of reforming the debt brake, which should make large-scale government investments possible.
“I’m a big fan of the debt brake”
“We currently have no extraordinary emergency situation that is beyond the control of the state,” says Julia Löhr. The energy crisis is over, the climate crisis is a generational task and not an external shock that suddenly hit Germany. The government must therefore try to close the next budget without the corresponding clause. “I’m a big fan of the debt brake.” This is the instrument for taxpayers to ensure that politicians do not spend their tax money on useless things. And in general: The journalist believes that the fact that there is not enough money to invest is a “fairy tale”.
So what can the German tax authorities do? On the one hand it’s about investing in the future, on the other hand it’s about savings. “What the Federal Constitutional Court reveals is that politicians have to be honest,” explains DIW President Marcel Fratzscher. The state – not just the traffic light government, but also its predecessors – would have distributed a lot of money in the past. The famous language images “with full hands” and “watering can” follow. Karlsruhe made it clear that it was not possible to simply manage the budget through special assets. Politicians must set priorities for their spending – for the next 10 or 15 years so that companies and citizens have planning security.
In the past two decades, the German state has made massive savings, says Fratzscher. Net investments are consistently negative. The loss in value of infrastructure such as roads exceeds government spending. The discussion about the debt brake is therefore important. A distinction must be made between bad and good debts. It is about improving the performance of the economy in the long term, for example by investing in education. There was a lack of money for this, especially in the municipalities. The economist sees the greatest potential in abolishing tax privileges. For example with inheritance, real estate, real estate profits and VAT.
Steel industry as a nonsensical industry?
“It’s simply a myth that Germany is saving itself to waste,” FAZ editor Löhr takes up her already well-known devaluation. With an annual budget of around 450 billion euros and the well-known special funds, we are “swimming in money”. It’s now a question of where savings can be made. There should be no more subsidized fireworks.
She immediately antagonizes the SPD leader with a savings goal: the abolition of funding for the transformation of the steel industry. Not all industries are profitable in Germany, which is not the ideal country for the production of renewable energy, says Löhr. “We will always need gas or hydrogen, which we will have to import expensively from other countries.” When Anne Will alludes to the many employees who would be affected if the steel industry were to go away, Löhr replied that unemployment would not be the problem given the two million job vacancies in Germany.
Klingbeil cannot leave this alone. “These are jobs, these are families.” We also learned from the Russian war of aggression that it is important to rely on production in Germany and not to be dependent on autocratic governments. You could easily say on a talk show that this or that industry could disappear from Germany, but that would cause lasting damage to the country.
Finally, Reiner Haseloff gets angry when it comes to the benefits of chip factories. After journalist Büüsker stated that jobs and tax revenue were only created locally, but that the dependence on states like China was not necessarily solved, that the chips were not only used sensibly and that ecological problems such as sealed agricultural land spoke against billions in subsidies, the head of the country held one fiery monologue.
“It’s not about a piece of field”
From the European tender that Magdeburg won, to arms issues and protecting the country through semiconductor technology. “It’s not about a piece of land,” he shouts indignantly. This had already been planned anyway and he was happy that not just any logistics company but “high-tech” would be setting up shop there. And that’s not all. Haseloff draws attention to the importance of the EU as a conglomeration of democracies that would fall behind in the world.
The municipalities are at their limit when it comes to accommodating refugees, continues Haseloff. The discussion in the panel, however, is on a meta level, which leads him to say: “Didn’t we hear the shot, what’s actually going on in this world?” It’s about Ukraine, the Middle East and so on and so forth. And then, from his point of view, it’s also about citizens’ money, about support and demands, about work before support.
When presenter Will finally intervenes and brings SPD leader Klingbeil on board, he just says: “There’s a bit of confusion going on here.” After all, citizens’ money is also the implementation of a ruling by the Federal Constitutional Court. The state must give people security and not also question things like citizens’ benefits, the pension system or basic child welfare. “Every minister now has to look at the current situation and see where savings can be made,” says Klingbeil.
Will points out the electricity and gas price brakes that were canceled by Finance Minister Lindner. However, the FDP leader rushed ahead without consulting the coalition partners. He expects things to be discussed together at the traffic lights, says Klingbeil in a decidedly matter-of-fact way. Now is not the time to talk about individual measures by ministers, but rather to put together an overall package. When this is finished, it will be announced. It is questionable whether Scholz will do this in front of members of the Bundestag on Tuesday. In any case, the traffic light coalition doesn’t have much time left. 2024 is just around the corner.