After the ruling from Karlsruhe, the coalition has to tighten its belt. Which projects will be canceled and which will be retained?
Berlin – After the Karlsruhe budget verdict, the coalition has to save money. On Wednesday evening (November 29th), the leaders of the traffic light coalition will meet with Chancellor Olaf Scholz (SPD). The aim is to determine what the federal government will spend less money on next year. There is still open and heated debate about what consequences the government will draw from the judge’s ruling.
In the dispute over the budget, Scholz named the first priorities for the 2024 budget in a government statement, but avoided clear definitions. “Under no circumstances should we let up” in supporting Ukraine and overcoming the energy crisis, the SPD politician said in the Bundestag on Tuesday. According to information from Reuters news agency Government circles have secured an increase in military aid to Ukraine to eight billion euros.
Energy price brake is definitely expiring
The Chancellor also announced the end of the energy price caps at the beginning of 2024 and pointed out that the federal states also had “extreme interest” in investing in chip factories, for example. He promised the population that the Karlsruhe ruling would not affect their everyday lives. “The state will continue to fulfill its duties.”
Finance Minister Christian Lindner has already prepared his traffic light colleagues for “significant efforts”. Before drawing up a constitutional budget for 2024, intensive discussions would have to be held, “which will not always be easy,” warned the FDP leader. However, what exactly the FDP leader is planning remained unclear.
Heating funding – what’s going on in the climate and transformation fund?
Since the Karlsruhe ruling, the federal government has been missing 60 billion euros that had already been earmarked for investments over the next four years. This should, among other things, finance billions in funding for Intel and TSMC chip factories, funding for the replacement of old oil and gas heating systems, the renovation of the railway, charging infrastructure for electric cars and many other projects.
Legally binding funds can flow in 2024 even without the 60 billion because the fund has its own income and enough money. One thing is also certain: heating subsidies should not be cut for the time being. But what about the rest? The projects affect the “economic core of Germany,” warns Economics Minister Robert Habeck (Greens). The Union proposes to reverse the heating subsidy. One possibility would also be to generate more revenue through tax increases – which the FDP categorically rejects.
Billion hole in the 2024 budget
The ruling not only affects the climate fund, it has also indirectly torn a billion-dollar hole in the budget for 2024. In total, the coalition will probably have to scrape together just under 20 billion euros.
This is mainly because the federal government has to dissolve the special pot for state energy price controls, the Economic Stabilization Fund (WSF). Interest payments from this will now be added to the core budget, as will aid for flood victims, which was previously paid from a special fund. In addition, the government will have to dig deeper into the reserves it built up during the refugee crisis this year. These billions will also be missing in 2024.
The WSF dissolution has concrete consequences for consumers: the energy price brakes expire at the end of the year and not at the end of March as planned. Even though prices have now fallen significantly, the federal government described the extension of the brakes as insurance against unexpected risks.
Scholz wants to “limit spending”
Citizens could also face higher electricity prices for another reason: the federal government had actually planned a subsidy of up to 5.5 billion euros towards network fees. The problem: This grant should be financed from the WSF. This money would now have to come from the core budget.
Scholz has announced that he will set priorities and “of course also limit expenses”. But what should be eliminated is an open question. The Union, on the other hand, already has a strike list. On it: citizen’s benefit, basic child security, social benefits. The SPD and the Greens reject this. The Greens, on the other hand, want to get subsidies that they believe are harmful to the climate, such as tax breaks for company cars.
Fundamental decision on the debt brake
The debate about the debt brake is still ongoing. Many SPD and Green politicians are calling for a reform so that the state can take out more loans for important investments. Then some projects would no longer be on the brink. Economists also think this makes sense, and even individual CDU prime ministers said they were willing to talk. However, the FDP has so far insisted that the regulation in the Basic Law will not be affected and is therefore in line with CDU leader Friedrich Merz.
However, the issue divides the Union. Berlin’s CDU mayor Kai Wegner continues to insist on changes. “I have a clear stance,” he told the magazine star. “The reform of the debt brake for future investments is urgently needed.”
Merz then publicly reprimanded Wegner. “The decisions are made here in the German Bundestag and not in the town hall in Berlin,” said the Union faction leader in his response to the Chancellor’s government statement. The traffic light needs to have “no illusions” that it can drive a wedge into the Union. “We will stick to the debt brake of the Basic Law.” (skr/afp/dpa)
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