Es is a counterpoint to the principle of “America first”. When Federal Economics Minister Robert Habeck (Greens) had the latest political twists in the election campaign explained to him at the German embassy in Washington on Wednesday evening American time, there was mineral water from Gerolsteiner and Cola from the German discounter Lidl. Even if the federal government often criticizes the nationalistic tendencies in American economic policy, a little “Germany first” is still allowed.
The atmosphere in the “Berlin Bar” is relaxed. Habeck and the German ambassador Andreas Michaelis are on first name terms. The former spokesman for the Foreign Minister Joschka Fischer is close to the Greens. But it doesn't take long until the three letters that politicians and companies have been talking about for almost two years are mentioned: IRA, the abbreviation for Inflation Reduction Act. With this, Joe Biden's government wants to make the American economy climate-friendly. The $370 billion over a ten-year period that Biden once announced is no longer relevant; the investment bank Goldman Sachs now estimates the volume at $1.2 trillion. For Robert Habeck, the IRA is both a blessing and a curse. Curse because German companies invest in America instead of Germany, citing better funding. Blessing because Habeck can argue exactly that in the budget debate that is now starting again.
Economics Minister, Vice Chancellor, Green Party campaigner
The rules for this evening are that it is not allowed to quote from the discussion between Habeck, Michaelis and two dozen managers of German companies. So just this much: There is a certain level of helplessness. Companies usually receive subsidies from the IRA through tax credits, so-called “tax credits”. This is considered to be much less bureaucratic than the subsidy programs in the EU, although some in the group also consider the process in America to be too bureaucratic. Unlike Germany, the United States does not have a debt brake and the IRA is not capped, at least not yet. Habeck cannot offer companies something like that. “Globally, we probably have the strictest debt rule there is,” he said before his departure from Berlin. “That stops us from doing something like that.”
This is his third trip to the United States. He was there for the first time in spring 2022, shortly after Russia attacked Ukraine. Then again in the spring of last year. The journey now is comparatively long. We continue to New York, for a conversation with UN Secretary General António Guterres, and to the German medium-sized company Trumpf in Chicago, which now has more sales in America than in its home market of Germany. On this trip, Habeck is partly Economics Minister, partly Vice Chancellor, partly Green Party campaigner. Sometimes all in one sentence.
Adapt political goals to reality
The appeal of imitating the Americans and their IRA remains unbroken in Germany. The North Rhine-Westphalia Economics Minister and Habeck's party friend, Mona Neubaur, has just called for a debt-financed “investment booster”, the Green group is calling for a “Germany investment fund”, the SPD is calling for a “Germany fund”. What many traffic light politicians don't see or don't want to see: It's not yet clear whether the strategy behind the IRA will work. The closer the election date in the United States gets, the less Biden is a climate protection president.
The tax discounts for buyers of an electric car have not yet had the desired effect. Too expensive, too little range, too few charging options: Similar to Germany, the share of electric cars in car sales remains at a low level; last year it was almost 8 percent. The United Auto Workers (UAW) union is warning of impending job cuts. Biden is now considering weakening the targets for the transformation of the auto industry. These still stipulate that 60 percent of new cars in 2030 should be electric cars.
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