All the media have now commented on the coalition compromise on budget planning for 2025, mainly from the perspective of those involved. Capital journalism does not use its own standard, but usually uses a yellow, green or red standard.
From the point of view of the three party politicians involved. Olaf Scholz speaks of the general work of art, one finds the whole quite clever and clever; there is no breakthrough in the coalition. There is no constitutional crisis. No jobs need to be re-advertised. Scholz can remain chancellor and Habek his deputy. However.
But policy is another word for guiding decisions. And this directed decision did not happen. Because it wasn’t about Germany first. First of all, it was about maintaining power
This budget compromise is a jumble of cheap promises and wild guesses that are unlikely to survive a serious, parliamentary process in the German Bundestag and its budget committee.
It is important to know that the budget law is the most important right of parliamentarians. Since the time of Reich Chancellor Bismarck, only they have been given the right to determine the revenues and expenses of the state. This is where the directive power of the Federal Chancellor ends. He and his ministers can only make recommendations.
And that is precisely the reason why a self-confident parliament with experience in financial matters will not put up with the presentation by Robert Habeck, Christian Lindner and Olaf Scholz as a “total work of art”. Objectively stated priorities and this coalition decision do not coincide.
# Priority 1: Strengthen Germany’s defense forces
Defense Minister Boris Pistorius and the Bundeswehr are the big losers of this compromise. Pistorius wanted to increase the national defense budget by at least €6.5 billion from the current around €52 billion. Not because he is a servant of the arms industry, but because the Bundeswehr is in a pathetic state.
The inconvenient truth. as soon as the special assets of the Bundeswehr are exhausted, it will not be enough to maintain the two percent target promised within NATO. Permanent income is too low.
Next year, Pistorius should only receive about 1.2 billion euros. The Bundeswehr budget is therefore not a turnaround budget, but rather an expression of willful ignorance. One hopes Putin doesn’t go through with it. People continue to rely on US military capabilities. People use big words to make themselves important in parliament (Scholz: “We are living at a turning point”) and hope that the public will be oblivious on election day.
# Priority 2: The shame of underspending
The global expenditure deficit in the 2025 budget is 16 billion. This means that 16 billion euros are still missing from the balanced budget. A layman, hearing the phrase “global underspending”, thinks that big savings have been made here.
On the contrary, these words say that savings should be made here, but we could not decide where and how to apply the red pencil.
Therefore, this term describes the extent of the lack of agreement. The three could not agree on proposals for savings on such a massive scale. There was no prioritization, which means in plain language: after the agreement, before the conflict. The correct title above this result would be: We agree to disagree.
# Priority 3: Improve the conditions of companies’ offer
The German economy, and especially medium-sized businesses, cannot maintain high growth rates in the prevailing supply-side conditions. The cocktail of high wages, taxes, unpaid labor costs, interest rates, inflation and rising energy costs, as well as bureaucratic overhead, is not only unhealthy, but toxic.
This poison paralyzes growth. That is why the economy is shrinking.
Anyone who calls for “patriotic investment” in this situation, as the Minister of Economic Affairs does, is guilty of not helping. He reacts like a doctor asking a writhing patient to pull himself together.
# Priority 4: Dare to be more real
The growth initiative outlined in the agreement can be calculated on the expenditure side, but not on the revenue side. The assumption is that the “growth package”, consisting of 49 measures aimed at boosting investment and cutting red tape, will lead to an additional 0.5 percent growth in 2025. This will bring 26 billion euros more economic output, says the Minister of Economy.
The projected impact is questionable because government stimulus from planned measures alone could never show a growth rate nearly twice the 0.3 percent expected by the federal government in 2024. Here you play with numbers like in a casino.
# Priority 5: Limit the welfare state
It would be absolutely necessary to slow down the growth of the welfare state and then limit the budget. For years, the social budget has been growing faster than the national economy, which means that the mechanism of prosperity is overloaded. Given the aging population, this welfare state is not for the future.
Because it dares not tell its citizens the truth, the state must confiscate ever-increasing shares of wages, profits, dividends, assets, and bonuses to meet the legal demands it provides to those it deems needy. Citizens’ money remains untouched. A further increase in the child allowance is planned for next year. This does not solve the problems, but aggravates them.
# Priority 6: venture into the more private sector
Instead of boosting private building activity by cleaning up building regulations and increasing the flexibility of tenant protections, the aim is to pump extra taxpayers’ money into social housing. The unleashing of private construction activity, which has reached a de facto deadlock in Germany, is being tried to be replaced by government action. This cannot succeed.
This year there is a shortage of 600,000 apartments, say the Council of Real Estate Experts. Just under 50,000 social housing units were funded last year. Once again, the problem and the solution do not coincide. Despite these amounts, the emergency situation in the housing market will not disappear, but will worsen.
Conclusion: What was decided serves to preserve power, but not to preserve welfare and security in Germany. The day when the people will understand that the government is unable to set priorities, it will not be a good day for traffic lights. Or to say with Franz Josef Strauss.
