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Impending breach of constitution: Traffic light coalition aims to suspend debt brake again

The traffic light coalition, as a result of the Karlsruhe budget ruling, plans to introduce a supplementary budget for this year. In an announcement on Thursday in Berlin, Finance Minister Christian Lindner (FDP) stated that in consultation with Chancellor Olaf Scholz (SPD) and Vice Chancellor Robert Habeck (Greens), he will present a corresponding draft to the cabinet next week. Through this method, expenditures, especially for the gas and electricity price brakes, should be retroactively legally secured.

In this case, credits were used that, according to the assessment of the federal government, were not available after the judgment of the Constitutional Court. Whether the debt brake should be suspended again with the supplementary budget was not explicitly stated by Lindner.

Constitutional breach was imminent after BVerfG ruling

Without the safeguard, a breach of constitution would have been imminent in the budget for 2023 following the judges’ ruling in Karlsruhe. The judges decided that the federal government is not allowed to set aside emergency loans for later years in reserve. According to experts, this is exactly what the federal government did for the energy price brakes in the Economic Stabilization Fund.

This year, an amount of 37 billion euros was already spent from this fund until the end of October, and additional funds are expected by the end of the year. Furthermore, aid from a fund for flood victims, which was established under similar conditions in 2021, is also supposed to be secured. In total, Lindner aims to establish loans amounting to around 45 billion euros on a constitutionally secure basis.

Lindner: “I consider it my duty to set the record straight now”

“I consider it my duty to set the record straight now,” said Lindner. Only then can we talk about next year’s budget and the years after. The federal budget for the current year should be put on a constitutionally secure footing through the supplementary budget before the end of the year. On the other hand, it is still uncertain when the federal budget for the coming year can be approved. According to the ruling of the Federal Constitutional Court, the draft must be thoroughly overhauled.

Approval date for the 2024 budget still open

As a result, the traffic light factions of SPD, Greens, and FDP have canceled the budget approval planned for next week in the Bundestag. However, they have not completely given up on finalizing it before the end of the year. There is the possibility of shortening deadlines and holding special sessions within the coalition. Scholz emphasized on Wednesday evening that he expects a swift and very timely conclusion.

He also stressed that the traffic light coalition intends to uphold its plans in social, climate, and economic policy. Nevertheless, it is still uncertain what will happen with the projects that were supposed to be financed from the climate and transformation fund. Following the Karlsruhe ruling, this special fund for climate protection and the development of a carbon-neutral economy is lacking 60 billion euros that were already earmarked. The court declared the reassignment of these loans, originally approved for coronavirus response, as null and void.

According to the coalition, the legally binding expenditures can still be managed next year. The fund also includes revenues from the CO2 price. However, the remaining funds will not be sufficient for all endeavors. There is strong disagreement within the coalition of SPD, Greens, and FDP about where to cut, prioritize, or completely eliminate expenses.

Union politicians advocate debt brake reform

Economists and politicians from the SPD and Greens had suggested a reform of the debt brake to solve the problem. On Thursday, a CDU prime minister surprisingly advocated for this as well. “In the interest of sound finances, the debt brake is a good idea. However, I consider its current design to be hazardous,” said Berlin’s Governing Mayor Kai Wegner on X (formerly Twitter), as well as in an interview with the magazine “Stern.” “As I have been saying for a while, it is to be feared that the debt brake will increasingly become a brake on the future.” He believes that loans should be permissible for investments.

CDU party leader Friedrich Merz had previously defended the debt brake on the ARD talk show “Maischberger.” “At the moment, I do not see the need to tamper with the debt brake,” he stated.

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