New times call for new thinking. The SPD and the Greens have thrown outdated dogmas overboard when it comes to arms deliveries and spending on the Bundeswehr. But with that alone we are not yet prepared for the necessary radical transformation of the German economic model to maintain our prosperity. To do this, the CDU and CSU must complete their own turning point. Friedrich Merz should approach the government together with Markus Söder and say: “We are ready to fundamentally rethink the debt brake.”
The debt rule anchored in the Basic Law, which limits new borrowing to 0.35 percent of GDP, is not only a brake on urgent investments in climate neutrality and digitization, but also an increasing security risk.
In the traffic light coalition, FDP Finance Minister Christian Lindner, driven by poor poll numbers and the fear that more of his voters could switch to the CDU, is fighting increasingly doggedly for compliance with the debt rule. The debt brake works like a hand grenade that the coalition can detonate next year. And there are few alternative possible coalitions in which this would not be the case.
The debt brake threatens Germany to gamble away its economic future and political stability – and with it the foundations of foreign policy strength and military ability to act, with dramatic consequences for the rest of Europe as well. So far, however, this realization has hardly been widespread, even among security policy elites. Wolfgang Ischinger, President of the Board of Trustees of the Munich Security Conference, rejected calls for the debt brake to be suspended. According to Ischinger, the coalition simply had to declare that there was a war in Europe and that social welfare goodies could no longer be high on the agenda.
Ischinger is based on the erroneous assumption that it is so easy to push through additional spending for the military at the expense of cuts in the social sector. But the majority of citizens, given the choice, will opt for the “goodies” from welfare payments to pensions, not military spending. This is exactly why the government has packed the additional 100 billion euros in expenditure for the Bundeswehr into a special fund, bypassing the debt brake. Not only in the SPD and Greens, but also within the CDU, there is little appetite for cuts in the welfare state, which are unpopular with voters.
The CDU member of the Bundestag, Kai Whittaker, recently criticized the “social cutbacks” caused by the “brutal” cuts planned by the FDP finance minister Lindner in the social labor market. The fact that the CDU and CSU prioritize social spending over military spending has contributed significantly to the Bundeswehr’s under-equipment.
Under the conditions of the debt brake, the necessary expenditure for the military, diplomacy and international engagement will therefore fall far short of what is necessary. Worse still: Necessary future investments are systematically prevented by the debt brake. Actually, the debt rule, so the proponents promise, should protect future generations. In reality, it robs them of future viability.
Missed investments are a greater sin to future generations than debt. Public investments guarantee future growth, security and quality of life. The young generation has also understood this and supports “Fridays for Future” and not “Fridays for debt brake”.
Historians will one day dissect the mindset of the Angela Merkel years with a shudder of wonder. Not only did Germany increase its dangerous dependency on the authoritarian great powers Russia and China during this period. It has also missed an opportunity to make much-needed investments at a time of economic strength and negative interest rates as a result of fatal economic and fiscal orthodoxy. When the federal government was able to make money from debt, the CDU proudly announced that it stood by its black zero fetish. The result of the Merkel years is a massive loss of substance and sustainability, which is now becoming increasingly evident.
The clock is now ticking for a radical overhaul of the Germany model in global system competition: climate-neutral, technology-savvy, digitized and adapted to a deglobalizing world characterized by great power conflicts. For this (and for the repair of the neglected public infrastructure from train to school) massive and overdue investments are necessary. It is clear that the debt brake makes these investments impossible.
The budget planning for the next few years makes it clear that there are not even enough funds to even come close to achieving the ambitious CO2 savings targets defined in the Federal Climate Protection Act by 2030. And that is just a small example of the many missed investments without which the basis of our prosperity would be threatened.
In addition, the debt brake as a controversial issue is likely to increasingly contribute to political instability. This also severely weakens the scope for shaping foreign and security policy, because it dramatically undermines the two foundations of foreign policy strength that are decisive for Germany: economic strength and political stability. Not only, but also foreign and security politicians should therefore recognize that the debt brake is the gravedigger of Germany’s future viability in global system competition. It’s time for a first class funeral.
Yes, the adoption of this dogma would be a difficult step, but the only responsible one in terms of the country. Even without a debt brake, parties can promote necessary savings or alternative sources of finance such as a wealth tax. If SPD faction leader Rolf Mützenich can come to the painful realization that security in Europe is only possible against, not with, Russia, then it is to be hoped that Friedrich Merz can also imagine a Germany without the debt brake.
If this step hurts too much, the Union parties could offer an amendment to the Basic Law to completely exempt investment spending from the debt brake. In return, it should demand a special say in the structuring of investment spending and present ambitious plans for the effective use of funds. Of course, it is tempting for Merz to wait and see whether the debt brake breaks the traffic light. But the situation in the country is too serious for that.
