The two basic questions of any modernization policy are: Where does the money come from? And does society even want that? According to the Federal Constitutional Court’s ruling, both questions remain unanswered.
Of all things, the old Groko has once again become the dream image of many Germans. The government alliance is ultimately responsible for the modernization backlog that the traffic light coalition is currently stumbling over. The projects that the Climate and Transformation Fund (KTF) stopped by Karlsruhe have two things in common: they are now on the brink. And they should have been initiated years ago, no: should.
Climate and transformation policy is now as popular as athlete’s foot. The fact that too little has been invested in the analogue and digital infrastructure for years, that many schools are in an embarrassing condition, bridges are dilapidated, rails are not passable and wind turbines have not been installed to a sufficient extent – from many people’s perspective, all of this is apparently not as bad as it is debt brake cast in concrete and the desire for calm in the government alliance.
A balanced household was so important to the “Swabian housewife” that she didn’t notice how her apartment was becoming more and more shabby. Real Swabians know that possessions have to be looked after. 60 billion euros are now missing for this care, perhaps more if the Union also sues the Economic Stability Fund, as threatened yesterday, and this also turns out to be unconstitutional. This is a catastrophe – for all of us.
Those responsible for traffic lights were completely unprepared
Because the traffic light has not only inherited a difficult inheritance, it has also turned out to be just as divided as had been feared. The general condemnation of the traffic light work is not fair: securing the energy supply last winter, the Germany ticket, the 12 euro minimum wage, the ramping up of the energy transition, the hesitant but unprecedented support for Ukraine – all of these are just Examples of how this coalition has done a lot of things right.
However, that will now take a back seat. The Federal Constitutional Court’s ruling on Wednesday obviously caught those responsible for traffic lights completely unprepared. In one fell swoop, they lost the central financing instrument for financing their climate protection and modernization projects. Marcel Fratzscher, the head of the German Institute for Economic Research, does not expect any immediate problems because there is still enough money available in the climate and transformation fund, as he said on X (formerly Twitter) writes. Finance Minister Christian Lindner said yesterday that measures to promote energy efficiency and renewable energies in the building sector were excluded from the blocking of KTF funds that he had imposed; Funding for heating replacement should also be available next year. And Federal Construction Minister Klara Geywitz from the SPD share withthe funding programs of her house, such as the climate-friendly new building or the promotion of home ownership for families, are “not affected this year” by the ruling.
Nevertheless, the traffic light policy has been subject to massive funding restrictions since yesterday. Fratzscher therefore hopes that the verdict will lead to a reform of the debt brake: “It is not up to date because it deprives politicians of the space they need to combat crises and make urgent investments for the future – in education, climate protection, innovation and infrastructure.”
Debt brake remains the big taboo
It’s not just Fratzscher who sees it that way, the head of the employer-related German Economic Institute, Michael Hüther, also believes that the debt brake is “out of time”. The transformation to climate neutrality requires other solutions – “for reasons of efficiency and intergenerational equity”. The IW boss calculates that there is scope for this: Even if the debt brake were raised from 0.35 to 1.5 percent of gross domestic product, German national debt would fall significantly. “That would allow additional debt of around 50 billion euros in the coming year alone without endangering the sustainability of public finances.”
However, this will not be possible with either the FDP or Chancellor Olaf Scholz, and even a Union-led government would shy away from reforming the debt brake like the devil shuns holy water – the political debate surrounding the issue is too poisoned. CDU leader Friedrich Merz has already announced that the traffic light for easing the debt brake “will not receive approval” from the Union.
The Union and FDP can hope to be rewarded in the surveys for their stance on the debt brake. The traffic light policy of using budgetary tricks to create scope for modernizing the country has failed miserably. Whether it will survive the upcoming conflicts is uncertain – whether a successor government will find the strength to implement a sustainable modernization policy is even more uncertain. This is where the catastrophe lies. Politics has reached a dead end.