New sub-budget: The traffic light tricks with the Bundeswehr billions

Es is a liberation: 100 billion additional for the Bundeswehr, secured by a special fund and an amendment to the Basic Law. Chancellor Olaf Scholz took his own coalition by surprise with his surprising maneuver. The liberal Finance Minister Christian Lindner was one of the few that the SPD politician involved in the decision before the government statement. The goal of making the Bundeswehr ready for defense is correct, but is it the way to get there?

The starting point is clear. Russia invades Ukraine, and Army Inspector Alfons Mais publicly states that the Bundeswehr is “more or less blank”. What an indictment. External security is one of the elementary tasks of a country. She has been neglected. The defense budget was only increased under strong pressure from America, too late. Germany is still well away from the NATO target of spending 2 percent of economic output on its defense. This should now be achieved at supersonic speed.

The instrument of choice is once again an ancillary budget. The federal budget itself is dominated by social spending. To a large extent it is only a flow heater for the social security funds, first and foremost the pension insurance system, but the health insurance companies are also showing worrying dynamics. The Economic Advisory Council has taken the trouble to break down the additional expenditure that is possible according to the financial plan up to 2025. The frightening result: the majority is used up by the pension. No wonder that there is a lack of funds for the actual tasks of the state.

Already 26 sub-households

One gets the impression that when a new task needs to be solved, one takes refuge in a shadow budget, be it for the expansion of the daycare center, digitization, flood damage, the energy transition and now the Bundeswehr. The Treasury lists 26 special funds and three reserves. Even experienced observers lose track of what is planned for what. If you want to know what the federal government really costs its citizens, you will only find part of the answer in the general budget. Even if loans are taken out via special funds, the associated costs will eventually become noticeable. At least the interest rates cannot be defined away.

Is another side budget really sensible and necessary? Whereby special funds already fall into the category of targeted deception. There is no money there – on the contrary. Only credit authorizations that will be realized at some point are bundled there. Nevertheless, the debts that you make later are already booked this year. That helps Lindner, who promises to comply with the debt rule in the Basic Law again next year. In view of the existing financial planning, which his predecessor Scholz had bent for the election campaign, and the wild applications from cabinet colleagues for higher spending, that would be an achievement. And yet it remains window dressing when you proudly show a net borrowing of a few billion – and at the same time tap the capital market with a high double-digit billion amount. That is not the purpose of the debt brake.

There’s no denying the Bundeswehr needs more money: their planes should be able to swim, their tanks should be able to taxi, their frigates should be able to swim and their submarines should be able to dive. Most of the equipment has to work. Unfortunately, this is not the case. New equipment is often required. For the foreseeable future, this will be financed from two sources: the federal budget and the special fund. This must be synchronized in such a way that after this legislative period the NATO quota can be permanently raised from the federal budget. But even in the long term, no amount of money will be enough if the entire procurement system is not reorganized. Scholz probably didn’t care when he put his round sum in the shop window. But that’s just where the work begins.

Now the traffic light coalition wants to change the Basic Law in order to secure the new special fund. The Union is basically willing to take part. Given the war in Ukraine, that seems like a patriotic duty. Scholz has not yet said exactly how he wants to change the Basic Law. It is therefore too early for a final verdict. But an uneasy feeling sets in.