The government has to make do with less money – that’s what the new tax estimate shows. Finance Minister Lindner uses the presentation of the numbers to make clear announcements to the traffic light partners. There’s even a pretty clear threat, albeit in Latin.
It’s the next bad news for the traffic light coalition: it will have to make do with less money in the coming years. The federal government has to forego 5.6 billion euros this year and 11 billion euros next year. This is the result of the new tax estimate that Finance Minister Christian Lindner announced in the afternoon. The federal and state governments will therefore be missing a total of 80 billion euros by 2028.
This is significantly less than was predicted in the last tax estimate in the fall. He had expected a shortfall in income, says Lindner when presenting the figures in the afternoon. They would come about, for example, by reducing the electricity tax, which had not yet been taken into account at the time. “Nevertheless, we have revenues that are over two billion euros lower than we expected.”
Less money is never good news for governments. But this is particularly true for traffic lights. It is currently in the most difficult budget negotiations since its existence. The same as defusing a bomb. If they don’t succeed, it could tear the government apart.
Government should make do with money it has
That’s why the FDP leader isn’t acting particularly cautiously. On the contrary: Lindner uses the opportunity to make clear statements towards the SPD and the Greens: “The spending must be prioritized in such a way that it strengthens growth,” he says. Or, a little more clearly: “The result of the tax estimate destroys the illusion of those who assumed that money would simply fall from the sky and free us from recognizing fiscal needs.” And finally: “Taxpayers hold us accountable to set clear priorities and not continually expand social spending.”
What he means by that: The government should make do with the money it has. That should sound reasonable to most people – but when you zoom in closer to the problem, the situation is no longer quite so simple. Because where exactly should we save? Maybe in the Bundeswehr? Or in climate protection? The social benefits? It is easy to give good reasons against each.
Agreeing on a budget has always been a challenge for all governments. But this time the exercise is much more difficult. One reason for this is the ruling of the Federal Constitutional Court last November. Since then, the debt brake can no longer be tricked, as happened before. The financial scope has therefore massively shrunk.
Perhaps even more important is something else: the SPD and Greens on the one hand and the FDP on the other simply find different things important. Some want to do something for low earners, the unemployed and the climate. The others want to relieve the burden on the economy. But there isn’t enough money for the “everyone gets everything” method.
Even without a debt brake, there are enough controversial issues
The debt brake also ensures this. They could be relaxed, it’s not just the SPD and the Greens who say that. The Federal Government’s Council of Experts and, most recently, prominent economists such as Michael Hüther and Sebastian Dullien also spoke out in favor of it. But Lindner is sticking to her ironclad. Otherwise the interest burden will eventually crush us, he says. And: Those who have reserves are also better off in terms of security policy.
But it didn’t take the ongoing debate about the debt brake to escalate the dispute over the 2025 budget. It started a few months ago. In consultation with Scholz and Habeck, Lindner set upper limits for the individual ministers’ budgets. They were then supposed to tell him how much money they needed for the coming year. And at the same time stay well below this limit, that’s how Lindner imagined it.
It happened as it had to happen: some people dropped out. Foreign Minister Annalena Baerbock, for example, but also Development Aid Minister Svenja Schulze and Defense Minister Boris Pistorius. He is demanding 6.5 billion more euros. Lindner then questioned the pension package that had already been decided. The FDP also wants to abolish the pension at 63, a pet project of the SPD. It’s complicated.
Linder does not want to reveal how much money is missing for the budget. In the afternoon he said that a gap in the low double-digit billion range needed to be closed. So at least ten billion euros are missing. In recent months there has also been talk of up to 25 billion euros. Now what? “I can’t give any specific figures because I don’t accept the registrations from a number of ministries,” says Linder when presenting the tax estimate. Not good conditions for reaching an agreement.
Just under two months left
But that’s not all. Because Lindner also wants to reduce taxes. He wants to prevent the cold progression, he says. If someone ends up paying more taxes with a salary increase that only compensates for inflation, that is a hidden tax increase. “I can only find them cowardly,” says Lindner. What comes next is a threat in Latin: “That’s why it is for me condition sine qua non“That cold progression for people will also be ruled out in 2025 and 2026 and there will be relief.” Condition sine qua non, which in German means something like: A condition that must be fulfilled. And if not? There is no household. But a government that can’t manage a budget is done. Then the bomb would have failed to defuse.
Now political agreement must first be established in the federal government, says Linder. There are different demands. Some are for a higher minimum wage, others want to abolish the solidarity surcharge. The SPD wants the former, the FDP wants the latter. “We will now bring this together,” says Lindner. The federal government wants to achieve this feat by July 3rd. Then there will be the last cabinet meeting before the summer break, then the budget should be finalized. There are still seven weeks until then.