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Review of Ulrich Reitz: And then Habeck makes a statement like a declaration of surrender

If someone seeks causes why the traffic light government is increasingly losing the trust of the population, one does not need to look far. The latest example is the debate on how to stop the ongoing decline of the German economy. 

The SPD and the Greens in the Bundestag have long been focused on easing the debt brake – for “investments”. However, a two-thirds majority in parliament is required for this, and it is not in sight. The Union has expressly stated that they will not support it, nor does the FDP.

But why discuss something that has not the slightest chance of success in the remaining time until the end of the legislative period?

Watch the video for another Habeck scene that might interest you: “Don’t know if the country can handle it”

Habeck raises expectations that he cannot meet

The effect of such a fundamentally useless debate is destructive: It raises expectations that cannot be met, and then wonders why more and more citizens are frustrated. This is also the case with the new initiative by Robert Habeck, who is after all the Vice Chancellor of this federal government. 

For more than two years, this federal government has been in office, and now Habeck wants to “try everything possible”. Also, to combat the recession in the economic development through a corporate tax reform. At first, this sounds like a set of ordoliberal instruments to stimulate the economy.

But: the way Habeck understands it, it is not liberal, but rather dirigiste. Because Habeck does not want to give more money to German companies so that they can decide for themselves how to use their new leeway. Rather, he wants to use the tax incentives for climate transformation. But that can lead to problems.

During Caren Miosga’s report, the head of the large steel manufacturer, Salzgitter, Groebler, who received almost a billion euros personally from Habeck for his climate-friendly transformation, revealed that he could already produce green steel next year. However, the green electricity and green hydrogen were missing. A good example of what can happen with taxpayers’ money when the state or a federal government sees itself as the better entrepreneur.

Habeck’s idea of a “special fund” for companies has zero chance

Habeck’s idea of lowering taxes for entrepreneurs with the help of a “special fund” has zero chance. Special fund means: debts, and at least 30 billion more per year. 30 billion, that is the amount needed to reduce corporate taxes in Germany from 30 to 25 percent, roughly to American (or French) levels. 

A special fund is not possible without a change to the Basic Law. The two-thirds majority needed for this in parliament is – as with the desired relaxation of the debt brake – further away from reality than the moon is from the earth. Not even the coalition is united here – the FDP would not participate.

And does Habeck really believe that the SPD would lower business taxes, by even 30 billion? It is not tragic that Habeck confused Thailand with Taiwan during his interview with Miosga, he corrected himself. More worrying is that Habeck adheres to a perverse fundamental idea: that the state finances the economy. So far, it has always been the other way around.

It’s the kind of thing that fuels frustration with the government

“Trying out things” sounds at first experimental and positive. Ideas in the field of economic policy are important, but what Habeck proposes here is neither economically nor realistically feasible. It is the kind of thing that fuels frustration with the government and raises unnecessary hopes.

To establish a world with a half-life of just a few hours or days is, however, destructive. It is the material that fosters frustration with the government and empowers the AfD (and recently the BSW). In this way, it feeds the edges from the middle (the left middle).

The economic policy of Habeck means: assistance for a few, only in the context of climate transformation – or, as with the billion-dollar subsidies for the US chip giant Intel – for geostrategic reasons. However, geostrategic reasons are a nebulous matter. If chip production in Germany were profitable, Intel would have come up with the idea on its own.

Due to Habeck’s substantial financial support for companies such as Intel, Thyssen Krupp, or Salzgitter, he has no money for the middle class. This distorts competition to the detriment of the corporations, who are already looking forward to the next subsidy.

Within the framework of the “power plant strategy” that the federal government has recently agreed upon, only hydrogen-capable gas power plants will be built. This constitutes a “bridge technology” that is necessary because the sun does not shine at night, and the wind also takes a rest. “Dark lull” is the new name for an old phenomenon. It is estimated to cost around 16 billion euros over the next 20 years. 16 billion is the new figure that disproves the old green claim that the sun and wind do not generate costs.

The climate minister turns debt-financed subsidies into a patriotic duty

Habeck wants to incur debts in order to pay subsidies to companies. He raises taxes (CO2 levy) instead of saving – or redistributing within the existing budget. He then deems this path as the only option because saving is not viable – citing the farmer protests – as “democracy cannot withstand it.” Thus, it is already clear what will come next.

With regards to the debts for more climate investments, the opposition, namely the Union, should participate, because according to Habeck, “we are not only economically pressured but also democratically.” Thus, the climate minister turns debt-financed subsidies into a patriotic duty to combat the AfD. Habeck rejects any other approach. The large demonstrations “against the right” thus become a useful tool in the hands of the left side of the coalition.

The idea of his ordoliberal rival Christian Lindner, who wants nothing to do with Habeck’s “big state” projects and suggests initially exempting companies from the solidarity surcharge, is not considered by Habeck. This would further widen the existing gap in the next federal budget.

Robert Habeck utters a sentence that can only be understood as a declaration of surrender

That’s true. However, Habeck’s debt-financed corporate tax reform would consume 30 billion euros, while Lindner’s Soli abolition would cost a comparatively modest seven billion. This is how the Institute of the German Economy estimates the amount that companies pay to the state.

During Miosga, Robert Habeck uttered a sentence that can only be understood as a declaration of surrender: “Let’s try squaring the circle.” However, this is mathematically proven to be an impossibility.

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