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FDP wished to take more time: Lindner explains why the budget deal of the traffic light coalition failed

It is a new severe setback for Chancellor Olaf Scholz and his federal government: Apparently, they are not able to finalize the budget for 2024 before the end of the year. The leadership of the SPD parliamentary faction no longer considers a decision by the Bundestag possible this year.

“Although we have done everything on our part, the budget for the year 2024 cannot be decided in time this year,” wrote the parliamentary managing director of the largest coalition faction, Katja Mast, on Thursday in an SMS coordinated with faction leader Rolf Mützenich.

FDP wanted more time: Lindner explains why the budget deal of the traffic light coalition failed

Thus, the traffic light coalition government has missed a target that they have set themselves: “It would be nice, the goal would be, it would be wonderful to achieve it this year,” government spokesman Steffen Hebestreit said at the end of November. The Union criticized that Scholz had lost control of his government. “From the chemical company to the homeowner to the craftsman or basic income recipient: the uncertainty in the country is growing every day,” said faction vice-chair Jens Spahn to the “Rheinische Post”.

Finance Minister Christian Lindner hinted on the sidelines of the EU finance ministers’ meeting in Brussels that the FDP wanted to take more time. “I have noticed that the coalition partners had very ambitious schedules,” he said.

Traffic light coalition chief negotiators find no solution

But nothing is possible without a political agreement to solve the budget crisis. However, the chief negotiators Scholz (SPD), Vice Chancellor Robert Habeck (Greens), and Lindner (FDP) are still struggling over how to fill a 17 billion euro hole in the budget for 2024. It arose, among other things, from the budget ruling of the Federal Constitutional Court.

The highest German court declared a reallocation in the budget null and void. As a result, 60 billion euros that were earmarked for climate protection projects and the modernization of the economy over four years are missing. What will happen with these expenses is still completely open. However, the court ruling also additionally affected other credit-financed special funds and thus indirectly the core budget.

Actually, the Bundestag should have already decided on the budget for 2024 last week. But after the ruling, the traffic light coalition suspended the process. Since then, Scholz, Lindner, and Habeck have been discussing how to fill the billion-euro hole. The Chancellor is “confident that a result can be achieved in the coming days,” Mast wrote in the SMS, first reported by the “Bild” newspaper.

How things could continue

However, the political agreement is probably no longer time to go through all the parliamentary instances before Christmas. Because the members of the Bundestag need time to discuss the proposals of the traffic light coalition. Especially the opposition is likely to insist on this. Here, the Constitutional Court backs them. The Karlsruhe judges had already decided in the summer that laws must not be whipped through parliament in an expedited procedure.

Now it could be that only the budget committee of the Bundestag concludes its deliberations before the turn of the year. After a political agreement, it would probably question experts again. Then the so-called clearing session would have to be concluded, with which the budget is fundamentally finalized. In January, the Bundestag could then come together for the budget week and then the Bundesrat could give the green light.

Read also:Discover the implications of the new budget bomb for Germany here.

Lindner: Delayed decision is not a crisis

Until then, the so-called provisional budget management would apply. In that case, only expenses necessary to maintain the administration and fulfill legal obligations would initially be possible. In practice, the finance ministry can, however, approve the ministries to use a percentage of the funds from the yet-to-be-approved budget draft each month.

This procedure usually also applies after a federal election when the new government cannot compile a budget in the short period between coalition building and the turn of the year. For Lindner, a delayed decision is therefore not a drama: “The state is completely capable of acting: no authority will close, no salary will go unpaid, and no one expecting support will not receive it,” he emphasized.

Limited room for discussions before Sunday

Does this mean the pressure is off the discussions among the traffic light coalition’s leaders? Even on Wednesday, the chief negotiators had deliberated until late in the evening. On Friday, Lindner traveled to important appointments in Brussels. Additionally, the SPD will hold its three-day federal party conference from Friday – Scholz is expected to speak there on Saturday. Therefore, there is little room for budget discussions before Sunday evening.

Federal Transport Minister Volker Wissing (FDP) advocated caution on the TV channel Welt. “Caution is very important here, because it is clear that everything that is agreed must be strictly examined for constitutionality,” he said.

Will the debt brake be suspended?

The main point of contention is whether the traffic light coalition will once again suspend the debt brake and thus authorize billions in loans. This would require a state of emergency to be declared, justified for example by the war in Ukraine. Lindner is not yet convinced of this, partly because he fears that the federal government would once again end up in court. A lawsuit by the Union would be very likely.

Cuts in various areas are also being discussed – from diesel subsidies to child basic security. Lindner emphasized that subsidies must be examined for their benefits. “But often, talk of supposed privileges is used to burden the working population,” he told the “Wirtschaftswoche.”

“Let’s first see where the state can better manage and more efficiently achieve its goals with the money it has. This particularly applies to the enormously increased social spending,” stressed the FDP leader. The money must be used more effectively there.

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