A.In March 2021, the Federal Constitutional Court made it clear to us that, under certain conditions, the Basic Law obliges political actors to distribute opportunities for freedom proportionally across generations. The court speaks of intertemporal safeguarding of freedom, which prevents a one-sided shifting of burdens into the future – here related to the reduction of greenhouse gases. What seems new to many about it has been a constitutional requirement since the Basic Law came into force. It has been a fundamental question since there have been modern constitutional states: namely, policy-limiting regulations on national debt.
It is true that the details of the regulation of a debt brake in the Basic Law in 1969 and 2009 have been revised because there was a need for further clarification. It has always been the case, however, that simple government-forming majorities in the Bundestag and in the state parliaments are constitutionally prohibited from indebting the state excessively at the expense of future generations. This applies in particular to consumer spending, through which certain groups of voters are to be addressed and bound.
The current debt brake was created in the spring of 2009 after the shock of the financial market crisis, which resulted in gigantic government spending. It sets binding limits on the day-to-day policy of income and expenditure to protect future generations, i.e. to safeguard intertemporal freedom, by prohibiting excessive prior burdens. Within this framework, the respective political majority can shape it freely. But if it goes beyond that, it violates the Basic Law, which can only deliberately be changed with a two-thirds majority in the Bundestag and Bundesrat.
The clever thing about today’s debt brake is that it does not work like a woodcut, but distinguishes between three constellations, but – and this is often ignored in the current discussion – applies at all times. So it cannot be suspended so that, as the state has put it aptly, not only “to take a sip from the bottle, but to drink several canisters”.
In case of emergency
The main objective of the debt brake is to achieve a general balance in the budget of the federal and state governments without income from loans. The federal government is granted a net borrowing of 0.35 percent in relation to the gross domestic product. That is around 12 billion euros in each of these years. In addition, there is an economic component – which is often ignored in the current debate – which reduces the authority to borrow when the economy overheats. In the 2nd supplementary budget in July 2020, this cyclical component amounted to a whopping 54 billion euros due to the economic slump at the time. In the now available draft law for a supplementary budget, it amounts to only, but at least 15.7 billion euros as an expression of much improved economic capacity utilization in autumn 2021. So the debt brake is breathing.
The trick is that, as a third, it not only takes into account the economic development, but also provides for a permitting, but at the same time also limiting regulation for extraordinary emergency situations that are beyond the control of the state and the state financial situation considerably – so far above a “normal” “Economic crisis addition – affect. This will be the case in 2020 and 2021 as a result of the corona pandemic, both to combat the health-damaging and economic consequences.
In this emergency situation, which must be determined by the majority of the legal members of the Bundestag, the debt brake allows credit financing for all measures aimed at combating the crisis that are suitable, necessary and appropriate with a view to the sustainability of the repayment of loans for future generations. But no more! Political measures that have always wanted to be implemented and which are now taken “on the occasion of the crisis” are not covered by the emergency clause. On the contrary, even in an emergency situation, it is advisable to check the necessary measures before financing the loan to determine whether non-existent reserves can be released or other savings potential can be exploited.
And one thing – regardless of the purpose – does not work at all: in the emergency situation, to build a reserve of loans that are only permitted in this situation, in order to spend them little by little in the following years, when the normal situation (including the cyclical component) is back . Concretely speaking: The 60 billion euros currently in question, which Parliament has granted as a precaution and which will definitely not be needed to combat the consequences of the corona pandemic in 2021, must not be rededicated in such a way that they give the regular debt-taking authority of 12 billion euros for five years double annually.
Instead, the swiftly required climate neutrality measures within the limits of the regular debt-taking authority, including the cyclical component, must be carried out by this generation of ours through redeployment or savings elsewhere. They must not be passed on to future generations.
The author is the managing director of the German District Association.
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