Wednesday November 10, 2021
Pandemic weakens national budget
The Court of Auditors sees finances in critical condition
The Federal Republic is doing well before the pandemic and is reducing its national debt. But two years of pandemic ruin that. The Federal Audit Office therefore calls for clear priorities and reforms. The left speaks of “old hats”.
High debts, problematic subsidies, overly diversified spending: the Federal Audit Office paints a bleak picture of the state budget. “The federal finances are in a critical situation,” says a report by the authority that was sent to the Bundestag. What is needed is “an honest cash slump, effective structural reforms and resolute priorities”. Left chairwoman Susanne Hennig-Wellsow criticized the authority’s proposals as “old hats”.
In its inventory, the Federal Audit Office criticized the fact that budget surpluses were accumulated in the economically good years from 2014 to 2019 – but “an active stabilization strategy with sustainable measures to improve the budget structure” was largely omitted. “Less than two years of the corona pandemic were enough to weaken federal finances significantly. Now it is important to turn things around as quickly as possible,” warned the Federal Audit Office. “Just waiting for better economic conditions will not be enough to make the federal budget resilient, to finally tackle the major future tasks and at the same time to save future generations from an excessive debt burden.” Only with a “resilient federal budget” could future tasks such as climate protection and digitization be mastered “on their own, sustainably and in a generation-appropriate manner”, it said.
“Courageous expenditure criticism” required
The recommendations of the Court of Auditors come right in the middle of the hot phase of coalition negotiations between the SPD, Greens and FDP. The question of financing is considered to be one of the most difficult topics in the talks. Specifically, the Federal Audit Office demanded “courageous criticism of expenditure with the aim of concentrating on the most pressing tasks assigned to the federal government by the Basic Law” from the next federal government. What is also needed is a “spending moratorium, according to which, for every new measure, counter-financing is generally ensured by ending other measures”.
In addition, social transfer payments would have to be geared more precisely “to the really needy and weak”. In order to improve the income side, the Federal Court of Auditors advised “a stronger fight against tax fraud”. A critical review of tax subsidies and concessions “with no or inadequate economic impact or climate-damaging effects” is also important.
Debt brake worked in pandemic
The Bonn authority was very clearly against the abolition of the debt brake. “The temptation of further indebtedness freed from the limits of the debt rule is not the means of choice to solve the tasks at hand,” she said. The President of the Court of Auditors, Kay Scheller, emphasized that the debt brake had proven itself in the Corona crisis and enabled aid worth billions. “Softening or even abolishing the debt rule would be the wrong way to go and capitulating to the problems without even discussing solutions.” Solutions would lie “not in non-transparent secondary budgets such as funds, special-purpose vehicles or other structures, but in a courageous and clear consolidation course,” explained Scheller. “I don’t see any alternative to that.”
“What the Federal Audit Office is proposing are old hats”, judged the left chairwoman Hennig-Wellsow. “What is necessary for a state that is able to act is a greater contribution from high incomes and wealth and the possibility of financing future investments through state borrowing,” she said. At the same time, Hennig-Wellsow warned the traffic light parties to present “something substantial” in terms of budget. “If the government’s own officials are already warning the federal government that the state finances will soon be in a mess, it will be high time,” she said.