Berlin Olaf Schulz (SPD) has personally intervened in the budget dispute to push through the austerity package planned by Christian Lindner (FDP) in the coalition government. Handelsblatt has learned from government circles that the chancellor and finance minister will now hold budget talks together. A meeting with six cabinet members is planned.
It is extremely unusual for the Prime Minister to conduct budget negotiations in person. The process clearly shows how divided the Traffic Light Coalition is over the coming year’s budget. Finance Minister Lindner sees savings as crucial to complying with debt brakes. On the other hand, the Greens and parts of the SPD criticized the austerity policies of the FDP leadership.
Over the past few weeks, Lindner has written to each of the ministers in which he sets out the maximum amount the department can spend in the coming year. All agencies except the Department of Defense must save.
However, the cuts vary from ministry to ministry. They should mainly affect so-called discretionary spending, such as funding schemes. Investments or social expenditures with legal rights are exempt from taxation.
However, not all cabinet members are willing to accept spending limits, with around half a dozen cabinet members saying discussions need to be held, according to government circles. These should include Foreign Minister Annalena Belbock, Home Affairs Minister Lisa Bowes (both green) and Interior Minister Nancy Feiser (SPD). But Transport Minister Volker Wissing (FDP) should not be satisfied either.
The differences between the Liberal Democrats and the Greens on budget policy
Ministers will now not have to negotiate with the finance minister as usual, nor with Chancellor Schulz. Lindner has coordinated savings bonds with Scholz. It suggests that Lib Dem finance ministers, and especially many Green Party ministers, are so divided on budget policy that a deal would be impossible without the chancellor’s intervention.
.>> Read here: Stalled Alliances – With these projects, the traffic lights blocked themselves
All ministers who don’t want to accept their spending cap must now knock on the door of the Chancellery. Scholz and Lindner then met for a meeting. The first batch is said to have taken place, with more to come in the coming days.
Ministers who are unwilling to save cannot expect much concession. According to the Ministry of Finance, there is a fiscal gap of about 20 billion euros in the 2024 budget. The savings that Lindner has mandated for the ministries should bring in nearly 5 billion euros in revenue.
this is to save money
A plan has been drawn up for how to raise the remaining 15 billion euros. So Lindner wants to cut subsidies. This is also stipulated in the joint agreement. However, there has recently been a dispute between the SPD, the Greens and the FDP over which financial aid could be reduced.
The Greens want to scrap commuter allowances, increase taxes on company cars or scrap tax breaks for diesel and kerosene.
(Photo: AP)
The Greens want to scrap commuter allowances, increase taxes on company cars or scrap tax breaks for diesel and kerosene. The Liberals reject this. Changes to these controversial subsidies are unlikely, and the Treasury may plan to cut smaller ones.
The federal government also wants to reduce financial support for the states. Lindner wants to cut funding for federal and state programs by at least 900 million euros, according to Schleswig-Holstein finance minister Monika Heinold (Green Party). Coastal protection plans are affected. From a federal point of view, this is the task of the federal states.
Baden-Württemberg Finance Minister Danyal Bayaz (Green Party) immediately criticized this: “At the meeting of finance ministers, the federal and state governments recently agreed that the major challenges of the moment can only be tackled together. The federal government takes care Refugees’ financial commitments cannot be cut in the blink of an eye in other joint projects.”
Another measure to close the budget gap: Some investments in the fields of energy and climate protection should no longer be paid out of the core budget, but from a special tank, the so-called Climate and Transition Fund (KTF). Funding is also tight in the medium term in KTF. However, fees can be reallocated in the short term.
Finally, Lindner should include a so-called global spending deficit (GMA) in the budget. This has been included in the budget several times in recent years.
These are flat-rate savings, and it’s unclear exactly where they came from. Background: Due to project delays, parts of planned expenditures (e.g. certain investments) often cannot be paid for.
Overall, all measures taken together should be sufficient to close the €20 billion fiscal gap. That means the draft budget is likely to be approved by federal cabinet in early July, before parliament’s summer recess.
>> Read here: Plan cuts strain traffic light coalition
The traffic light coalition’s budget dispute has dragged on for months. As a result, Lindner canceled the budget elements presented in March. The draft budget, originally scheduled to be decided in mid-June, has also been delayed.
more: Lindner sends savings targets to all ministries