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Debts, electricity, residences: Take a look at what the traffic light coalition promised us – and what came of it

A majority of Germans are fed up with their government. 59 percent want new elections next year. Those are the latest survey results from the weekend. The disappointment at the midpoint of the red-green-yellow coalition is immense. And it has a reason: No other government has come into power with such a full-bodied government program. And no other government has broken so many central promises.

This is even more true now that the traffic light coalition has to try to comply with the Federal Constitutional Court’s requirements for the 2024 budget, which has so far been seen as a clear violation of the constitution in the current accounting. First, there was a lack of a coherent plan, and now there is no money left to make significant strides.

There are six promising commitments that the SPD, Greens, and FDP had written in their coalition agreement. The voters hold them accountable. However, the government members apparently no longer want to be associated with them.

1. Debt breaking the constitution

“From 2023, we will restrict borrowing to the constitutionally prescribed leeway of the debt brake and comply with the requirements of the debt brake”, is stated in the coalition agreement.

This did not work. Even under Olaf Scholz as Finance Minister, the federal government switched to a kind of double bookkeeping. Then, under his chancellorship and with Christian Lindner as his successor as Finance Minister and with Robert Habeck as the biggest beneficiary, the Corona emergency aid fund was reappropriated as a climate fund in violation of the constitution.

Words like “special assets” – for example for the Bundeswehr – were used to disguise that in reality, no assets, but rather more debts, were being made outside the budget. The debt brake enshrined in the Basic Law has since existed only on paper. If it threatens to take effect despite the artfully constructed “special assets”, it is suspended with reference to emergency situations: for example, now with recourse to the 2021 flood disaster in the Ahr Valley or the war Russia waged against Ukraine in February 2022.

2. Electricity prices soaring

The coalition agreement states: “The federal government will ensure that the economy gets competitive electricity prices.”

That’s not happening. Germany’s energy prices currently stand at 40 cents per kilowatt-hour, including the electricity tax. Energy-intensive companies pay less, but still four times more than comparable companies in the US and seven times more than in China.

Following the budget decision of the traffic light government, the German Chambers of Industry and Commerce (DIHK) expects that electricity prices for businesses will continue to rise. DIHK President Peter Adrian predicts an increase of 10 to 20 percent. He warns of an “additional brake on the economy”. It sends the wrong signal to many companies that want to switch their production or fleet from fossil energy to electricity – “especially as the costs of diesel and kerosene are also rising at the same time”.

3. Housing construction hitting a wall

Promised in the coalition agreement: “Our goal is to build 400,000 new residences per year.”

Minister of Construction could not keep the promise.Klara Geywitz admitted at the beginning of the year that it was aiming too high. According to the ifo Institute, approximately 245,000 homes will be completed this year and 210,000 next year. Rising construction interest rates contribute to this, as do increasingly detailed building regulations aimed at reducing the energy consumption of houses.

Regulations for heating and insulation, and an opaque jungle of subsidies, have led to the emergence of a completely new profession of energy consultants, causing investors and builders to surrender. As part of the budget consultations, the federal government has scrapped the “speed bonus” for fast construction as well as the renovation subsidy rate that promoted energy-motivated renovations. This is further stifling the construction industry.

4. Mobility is becoming more polluting

“We aim to use the 2020s as a new era in mobility policy. We will make the necessary decisions with the goal of decarbonizing the mobility sector.”, promised the signatories of the coalition agreement.

The reality is different: The market share of electric cars in new registrations is expected to decrease significantly next year, according to industry experts. This is due to the reduced state subsidies for purchases. As the subsidy is dependent on available budget resources, it has been completely eliminated since this weekend.

Despite receiving more funds, the rail network, which remained an ailing company, is now receiving less money, which will certainly not improve its situation. Those who need to arrive somewhat punctually are switching to cars.

5. Bureaucracy suffocates initiative

When finalizing the coalition agreement, the participants looked each other in the eyes and vowed: “We want to simplify processes and rules, and give more time to the economy, particularly to the self-employed, businesswomen and businessmen, for their actual tasks. We will reduce unnecessary bureaucracy.”

The opposite has happened. Lutz Göbel, the president of the Regulatory Control Board, which is supposed to supervise the reduction of bureaucracy, says: “Typical craft businesses with ten employees cannot keep track of the density of regulations. If they consider everything that needs to be considered, they can shut down their business.”

Ministerial bureaucracies are growing larger. “More staff means that more people are dealing with regulations. This creates more and more effort.”

In fact, the public sector has been slowly but steadily growing since 2015. Currently, more than five million people work for the state again, and federal, state, and local authorities across the country complain that numerous positions are unfilled.

6. The air becomes dirtier

“We aim to further reduce air pollution to sustainably protect human health and the environment,” states the coalition agreement.

So far, there has been little progress in this regard. The incumbent federal government had “inherited” three operating nuclear power plants, which were scheduled to be shut down. Germany’s CO2 balance does not benefit from this. Operators of brown and lignite coal power plants continue to emit millions of tons of CO2 per year.

The most controversial law this year was the one regarding the mandatory conversion of heating systems to electricity as the heat source. The expensive conversion was to be cushioned with subsidies, the amount of which was uncertain for a long time. It is now clear that it will be less than promised due to lack of funds. This is definitely not progress for the German climate.

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