WIf a teacher can’t get along with his students anymore, then it’s off to the principal. If a finance minister can’t get through to his colleagues in the cabinet, then it’s off to the chancellor. This is exactly what is happening now in the budget dispute within the traffic light government.
Because Finance Minister Christian Lindner (FDP) has been trying in vain since January to convince some of his ministerial colleagues teach spending disciplineaccording to reports, half a dozen of them must now compete with Chancellor Olaf Scholz (SPD).
According to government circles, the unusual three-way talks between the respective minister, the finance minister and the federal chancellor have been going on since this week.
Time is pressing, because there is still a gap of 20 billion euros in the draft for the 2024 federal budget. On July 5, the draft budget is to be approved by the cabinet, as Lindner promised the budget politicians of the traffic light groups.
July 5th is the Day of the last cabinet meeting before the summer break. The draft budget, which is several thousand pages thick, should then be with the parliamentarians as quasi holiday reading.
According to reports, ministers from all three parties must attend the special talks. In the past few weeks, the representatives of the Green-led Family and Foreign Affairs departments, the Red-led Interior and Defense ministries and the representatives of the liberal Ministry of Transport have proven to be particularly stubborn negotiators.
With the choice of the unusual form of conversation, at least the economy meeting with the entire cabinet, which has also been discussed in the meantime, is off the table – at least for the time being. In 2010, the then black and yellow federal government was still struggling together in the chancellery from Sunday to Monday afternoon for the individual cuts.
In order to close the gap between the previously overestimated expenditure and the expected income, the Ministry of Finance sent letters with concrete savings proposals to each ministry in the previous week. These see in addition to concrete cuts inefficient subsidies and interventions Federal and state funding programs flat-rate savings targets for every ministry – only the Ministry of Defense is left out.
According to the Ministry of Finance, the procedure, including the boss talks, was not only agreed between Lindner and Scholz, but also with Vice Chancellor Robert Habeck (Greens). This agreement between the three leading cabinet members also means that the federal budget for 2024 is to be drawn up again within the framework of the debt brake.
This means that the possible new debt – unlike in the exceptional years 2020, 2021 and 2022 – is limited. Budget experts are assuming permissible new borrowing of between 15 and 18 billion in the coming year. The money has already been earmarked.
The dispute within the federal government has recently become even more violent because the tax estimate in mid-May did not bring any new spending leeway. On the contrary: Mainly because of the decisions already made last year tax relief – Keyword compensation of the cold progression – the tax estimators assume that the federal government will have 13 billion euros less available next year than was calculated in the estimate in autumn 2022.
Almost five billion euros are now to come in through the flat-rate cancellation of disposable, i.e. not already committed, expenditure. Depending on their size, the ministries have to contribute a different proportion of this savings amount. The so-called Afghanistan key is used, which has been included in the budget for years as a preventive instrument for such cases and defines required savings shares.
Department of Defense is exempt from action but would like more money
Boris Pistorius’ (SPD) Ministry of Defense is exempt from this. Still, people are not satisfied there. After all, in addition to the 100 billion euro special fund, they wanted a defense budget that was ten billion euros higher. Now Pistorius can only rely on getting the higher personnel expenses compensated for by the recent wage agreements.
According to government circles, further expenditures of around 15 billion euros are to be saved by reallocating investments and cutting subsidies and subsidies. The subsidies in particular will probably still be a subject of debate in the parliamentary process in the second half of the year.
The FDP has already made it clear which subsidies should not be approached under any circumstances: for example the tax breaks for diesel fuel and the flat-rate taxation of company cars. Both points that you see very differently with the Greens. There one demands persistently Cuts in environmentally and climate-damaging subsidiesto which the party in particular counts company car taxation.
The conflict that has been smoldering for months about the distribution of funds between the federal and state governments will also intensify with the budget draft that Scholz and Lindner have in mind. As Schleswig-Holstein’s Finance Minister Monika Heinold (Greens) made public this week, the federal states are threatened with a significant cut in funds.
The Ministry of Finance wants to cut at least 900 million euros from federal and state programs. This involves programs to improve the agricultural structure and coastal protection, to improve the regional economic structure and to promote urban development.
“If the federal government believes that it can restructure its coffers at the expense of the federal states, we will not simply accept it,” said Heinold. Similar criticism came from Baden-Württemberg and Bavaria. In the Federal Ministry of Finance it was said that the federal government was already relieving the burden on the federal states and local authorities and was also doing tasks for which it was not actually responsible.
The crisis talks with ministers who are unwilling to save should not be the last that Chancellor Scholz will have to hold in connection with the 2024 budget.
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