FDP criticism of Lang’s advance
Debt issue is the next bone of contention at the traffic light
08/20/2023 3:58 p.m
Ricarda Lang demands that the state must invest because of the weakening economy. In order not to touch the debt brake, the Green Party chairwoman relies on investment companies. The proposal falls on deaf ears with the Federal Minister of Finance – Lindner urges budgetary discipline.
In view of the narrow financial leeway, Green Party leader Ricarda Lang advocates circumventing the debt brake. “We agreed in the coalition agreement that we would not tackle the debt brake,” Lang told the German Press Agency in Berlin. “But that shouldn’t be used as an excuse not to look at other financing options for necessary investments in the future. Because they exist.”
An instrument provided for in the coalition agreement between the SPD, Greens and FDP that is not yet being used sufficiently is public investment companies, said Lang. In the case of an investment company, the federal government would provide it with equity. It could then raise and invest further capital through loans. The federal government would take responsibility for that.
The Treasury immediately warned that new debt would fuel inflation. “There are good reasons why political debt is legally limited,” said ministry officials. Lang wanted to overturn the Basic Law and at the same time ignore EU state aid law.
Lindner wants to push the debt ratio below 60 percent
Meanwhile, Federal Finance Minister Christian Lindner has set himself the goal of taking on less debt. He wants to reduce the debt ratio to below 60 percent of economic output as quickly as possible. He is still striving for this during his term of office, said Lindner in Berlin at a question and answer session with citizens on the federal government’s open day. The debt ratio is currently at almost 67 percent.
In the corona pandemic, the debts of numerous countries have increased significantly since 2020. Before the pandemic, the debt ratio in Germany was 59 percent, just below the EU upper limit of 60 percent of gross domestic product.
However, Lang advocated the taking on of debt by investment companies. “Without any impact on the debt brake, we can easily equip the railways or the Federal Agency for Real Estate Tasks in such a way that they meet the challenges of our time,” explained Lang. The Federal Agency for Real Estate (BIMA) could then invest in social housing. “That would be a win-win situation – for the many people who will still be looking for affordable housing in the future, and for the construction industry, which could really use some support in the current situation.”
FDP calls Lang’s proposal “unthought-out”
The deputy FDP parliamentary group leader Christoph Meyer reacted negatively: “There will be no direct or indirect breach of the debt brake with the FDP, no matter what Ms. Lang demands,” he said. It is “strange that the green coalition partner keeps coming up with new, unthought-out proposals to make more government spending”. SPD faction deputy Dirk Wiese told the newspapers of the Bayern media group that one should now “concentrate with full energy on the introduction of an industrial electricity price, an effective growth acceleration law and further simplifications in the area of approval procedures”.
The leader of the Greens also received opposition from the opposition Union. The parliamentary director of the Union in the Bundestag, Thorsten Frei, sees the Greens’ plans as a debt program with which an attempt is made to “trickily circumvent the Basic Law”. The state cannot accumulate more and more debt if it does not want to become incapable of acting sooner or later. Lang received applause from the left. It would be pragmatic and necessary to circumvent the debt brake with investment companies, said their financial politician Christian Görke.
Like Federal Minister of Economics Robert Habeck, Lang advocated financing a subsidized industrial electricity price from the Economic Stabilization Fund (WSF). This fund, set up during the corona pandemic, was reactivated during the energy crisis to cushion the consequences. “Last year we in the coalition agreed to recharge and use an already existing special fund, the Economic Stabilization Fund – with the aim of protecting the economy and, of course, the country in times of rising energy prices,” said Lang. “Now this protection may look a bit different, but it is no less important. The financial leeway is there.” Finance Minister Christian Lindner, however, rejects any other use of these funds.
According to Lang, the state should “strategically invest in infrastructure”
Lang demanded that prosperity reach those who worked for it. “Both belong together: In order to create more justice, we have to get Germany back on course for growth.” To do this, overregulation must be eliminated. “Second, I propose an investment agenda in which the state invests strategically in public infrastructure, in a country that simply works – and thus also stimulates private investment.”
In addition, state money must also be allocated according to social criteria. “If the state supports or invests, then you have to pay according to the tariff and guarantee the location. You could do that with the industrial electricity price, for example.” And finally, Germany needs enough workers and skilled workers. “That means more further training, more women’s participation in the labor market – and we now have to fill the Skilled Immigration Act with life, for example by recognizing professional and educational qualifications more easily and quickly.”
The current economic situation does not leave them cold, emphasized Lang. “Germany is a strong country with a strong economy. But if the economy in other countries is now growing faster again, also because the governments there are investing more, then we have to do it too. I assume that prosperity and justice will come in the next time will be the central issues of the traffic light coalition – and rightly so,” said Lang.