Dhe budget conflict smoldering in the traffic light has caught up with Finance Minister Christian Lindner (FDP) in distant Washington. At home, SPD parliamentary group leader Rolf Mützenich attacked the FDP politician twice. First, he accused the responsible minister of double standards. Secondly, he suggested tricking again with a side budget by reallocating funds – although it must be clear to him that Lindner categorically rejects this. After all, the finance minister has made public statements to this effect on several occasions.
The financial situation of the federal government is tighter than it has been for a long time. The coalition partners are blocking each other, so that the whole thing becomes a stalemate. In mid-March, Lindner had to cancel the so-called benchmark decision by the cabinet for the 2024 budget and the years that followed. His cabinet colleagues had gone beyond the scope with additional demands of 70 billion euros. To make matters worse, the situation had deteriorated. Expensive spending decisions, tax adjustments and interest rate increases, higher personnel costs have a negative impact.
There are also positive aspects: the foreseeable tax revenues have improved, and the deteriorating economic situation means that there is somewhat greater scope for debt. But the bottom line is that the experts in the Federal Ministry of Finance recently came up with a gap of 14 to 18 billion euros, which still has to be closed in order to comply with the provisions of the Basic Law – without even having fulfilled one additional requirement. According to Lindner’s constitutional lawyers, the current situation does not allow the debt rule to be suspended again. Tax increases are taboo for the FDP. So this path, which many in the SPD and the Greens would like to take, is also blocked.
A gap of 14 to 18 billion euros
Federal politics rested during Holy Week. Immediately after Easter, Lindner flew to the spring conference of the International Monetary Fund and the World Bank. It is not customary to comment on domestic politics abroad. But one can assume that nothing has changed in his position. The budget gap must be closed. In Lindner’s words, this means that the coalition must set priorities. The other way around: Less important things have to be left out. That means: shorten, delete, cut. That’s nothing unusual, but for a long time the union could avoid such unpleasant decisions.
Many expenses, not least of a social nature, are protected by law. Laws can be changed – and relatively easily. Budget Accompanying Act is the magic word. Such adjustments will then be decided in a package parallel to the budget law. When Lindner’s predecessor Wolfgang Schäuble (CDU) had to consolidate the federal budget after the financial crisis, he resorted to this means. Parental allowance has an upper limit.
At the same time, the government at the time passed a nuclear fuel tax (which the Federal Constitutional Court later reversed) and an air traffic tax. However, Lindner does not want any new taxes, rather the opposite, namely tax relief for the economy. Keywords are research funding, loss offsetting or extra depreciation in the form of an investment premium. But the SPD and the Greens are having a hard time with that.
The statements made by the SPD parliamentary group leader are exemplary. On Friday, Mützenich told the German Press Agency: “I expect seriousness in the deliberations, especially from the cabinet members who are responsible for preparing the budget and who nevertheless keep coming up with extensive spending requests – while at the same time they are on the Discipline others pound. Preaching water and drinking wine don’t go together.”
The politician suggested opening the Economic Stabilization Fund. “Of course we have to check exactly where there is potential for savings. But we should also talk about how we can mobilize additional funds from existing reserves.” The sub-budget established during the pandemic was increased after Russia’s attack on Ukraine to cushion the impact on the energy supply. It said “up to 200 billion euros”, as Lindner never tires of emphasizing. The FDP leader rules out a reallocation of funds that are not needed due to falling prices for electricity and gas. This doesn’t look like a quick fix.