There is something wrong. Or? For a week and a half, the traffic light coalition partners had held a series of debates on all sorts of topics: the 2023 budget, compliance with the debt brake, the consequences of inflation, higher interest rates, gas supplies in winter, nuclear power plants running longer, phasing out of the internal combustion engine. The cabinet decision on the next federal budget had been postponed – from Wednesday of this week to Friday next week.
Some things had built up in terms of expectations and the need for a solution. And when Finance Minister Christian Lindner, who was also FDP boss in person, saw “deprivation” times coming shortly before the coalition committee on Wednesday evening, the stage for the drama was actually opulently decked out.
But then nothing came. The coalition committee – the most important coordination round of traffic lights – met. At 8:47 p.m. on Wednesday evening, the German Press Agency reported: “Coalition Committee met”. But at 10:15 p.m. it ticked: “No resolutions at meetings of coalition leaders.” The round lasted 90 minutes. A bouquet of topics was addressed – but without result.
Instead, there are now two hanging games into July. One revolves around the “concerted action” in which Scholz wants to demand a lot from the social partners in view of the looming economic crisis, for which he has to offer something in return. The big event is to be staged on July 4th. There is already talk of a national effort, of cohesion in difficult times. This concerted action should be very far-reaching, it is said.
It should therefore not only be about moderating salary demands in order to prevent the dreaded wage-price spiral, but about relief beyond what the state can provide. According to the will of Minister of Labor Hubertus Heil (SPD), he should now concentrate primarily on “lower and middle incomes” when it comes to relief. This amounts to a veto by the Social Democrats against a speedy adjustment of the income tax rate to the price increases (a demand specifically by the FDP) and also a general reduction in value added tax, at least on staple foods.
Incidentally, the coalition has decided to wait and see how the relief measures that have already begun will have an effect. That means: The topic has been postponed until after the summer break, because the concerted action will not remain a one-day event.
The second stalemate is now the federal budget for 2023. Apparently there was hardly any debate in the coalition committee. Lindner now has to see how he can come up with a draft by Friday in a week that takes his own red lines into account (no additional spending beyond the key figures from March), contains FDP core demands (comply with the debt brake), but also the prospect of tougher times from Fall observed, with lower revenue and probably higher spending on relief. However, the results of the concerted action would then have to be incorporated – if there are any.
But can Lindner then submit a draft that would not be overtaken by developments in the coming period? Will the cabinet only vote on a pro forma bill so that the parliamentary procedure can start as usual right after the summer recess? Then in November, when there is a clearer picture of the economic situation and the new tax estimate is available, you can submit the necessary corrections to your own draft by means of a supplementary budget? Such a procedure would be possible, but it was probably not discussed in the coalition committee.
For Lindner and his FDP, this would have the advantage of being able to maintain the demand for compliance with the debt brake from 2023 at least until after the state elections in Lower Saxony on October 9th. He has tied himself so closely to it that he can only come out with a new emergency situation – which he may already be preparing with the “worrying situation” that he now fears for the second half of the year.
Seen in this light, the fact that there was no talk at all about the debt brake on Wednesday evening is not all that surprising. You just wait. It was SPD leader Saskia Esken who raised expectations a week ago that there would be a discussion. “I tell you: We will have to talk about the debt brake or other ways of financing in the coalition,” she had told the Tagesspiegel. SPD and Greens are openly urging the FDP to revise their stance.
The Parliamentary Left (PL), with 95 MPs the largest group in the SPD parliamentary group, has only just made clear announcements. The PL expects that “the FDP will reconsider the principles of its tax and financial policy,” said Sönke Rix, one of its spokesmen. He suggested suspending the debt brake due to an exceptional situation. The FDP should explain that they “do not stick to the dogma so hard”. Otherwise, the Liberals would have to be “ready to talk about new tax policy revenues”. The Social Democrats are extremely critical of cuts, especially in the social budget.
