On Thursday evening, the Bundestag’s budget committee approved a budget with spending of around 476.8 billion euros and new loans amounting to around 39 billion. After years of exceptions, the debt brake should be fully effective again – at least for the time being.
The Bundestag and Bundesrat are due to make a final decision on the 2024 budget at the beginning of February. However, the so-called cleanup meeting of the powerful budget committee is already considered a decisive step on the way to adoption in parliament. The most important questions have now been clarified.
“As coalition factions, despite different perspectives, against the background of multiple crises and despite a difficult initial situation of these parliamentary deliberations after the Federal Constitutional Court ruling, we are drawing up a balanced budget,” explained the householders Dennis Rohde (SPD), Sven-Christian Kindler (Greens) and Otto Fricke (FDP) after the meeting. The clear focus would be on social justice, economic incentives including tax policy, investments in climate protection, strengthening democracy and international cohesion. At the same time, subsidies would be reduced.
Complications due to constitutional court ruling
Actually, the federal budget for the current year should have been dry for a long time. However, a groundbreaking ruling by the Federal Constitutional Court in mid-November thwarted the traffic light coalition’s plans. The result: billions in holes had to be plugged in the budget and in the fund for investments in climate protection and restructuring the economy.
The leaders of the SPD, Greens and FDP negotiated this for weeks – and they made highly controversial cuts and austerity decisions. Consumers have to prepare for more expensive flights and higher prices for fuel and heating. The ticket tax for passenger flights as well as the CO2 price on heating oil, gas and fuel should increase and bring more money into the state coffers.
Cuts for farmers not affected
Because of the planned gradual abolition of tax relief for agricultural diesel, farmers across the country have been taking to the streets for weeks. Despite the protests, the traffic light coalition did not back down from these plans in the budget committee. “The traffic light coalition stands by this compromise,” said Green Party householder Kindler.
Before the meeting, farmers’ president Joachim Rukwied threatened new, far-reaching protests from Monday if the planned subsidy cuts were not reversed. The previous protests were the “foreshock,” he warned.
The impasse over the budget reached its climax on Thursday with the settlement meeting. After the Constitutional Court ruling, the Budget Committee decided in November not to give final discussions on the 2024 budget. That has now been made up for.
In the more than nine-hour meeting, the budget holders decided on a few changes to the draft by Finance Minister Christian Lindner (FDP). Among other things, there will now be no previously planned subsidy from the Federal Employment Agency to the federal budget of 1.5 billion euros in 2024. The reason is better annual financial statements in the 2023 federal budget, which creates financial leeway, said traffic light politicians. “The traffic light seems to have realized that social insurance is not a self-service shop,” commented the Union’s chief budget officer, Christian Haase.
In addition, the planned tightening of sanctions for citizens’ money is to be limited to two years. It is planned that job centers will be allowed to cut off citizen’s benefit for unemployed people for a maximum of two months if those affected repeatedly refuse to accept reasonable jobs. In order to stimulate the construction industry, the coalition wants to invest an additional billion euros in climate-friendly new buildings over the next few years.
Suspension of the debt brake is off the table for now
The surpluses from the 2023 budget will also be used to finance aid worth 2.7 billion for victims of the flood disaster in the Ahr Valley. Initially, the coalition kept the option open of declaring an emergency situation for these funds again and suspending the debt brake. That’s not necessary now, they said.
But it is not yet entirely certain that the debt brake will be complied with again after several years, with exceptions, in 2024. The SPD, Greens and FDP have agreed: If more money is needed to support Ukraine later in the year – for example because US aid is no longer available – additional loans could be approved.
The debt brake anchored in the Basic Law only provides for a very limited net borrowing. However, in the event of natural disasters or other exceptional emergencies, it can be suspended if the state’s financial situation is significantly affected.
Further criticism of cuts
The One organization and other associations criticized that development cooperation should be cut by a total of almost two billion euros compared to 2023. Transport associations criticize planned cuts in funding for rail freight transport and cycling.