Financial Shindig - Bundestag Suspends Debt Limit for 2023 Budget
The German Parliament, Bundestag, has authorized a temporary waiver of the country's debt limit, known as the 'debt brake,' for the 2023 fiscal year. This move is in response to the Carlsruhe budget ruling, securing previously issued loans.
Criticism Galore
The CDU/CSU party voiced constitutional concerns about the supplementary budget of the traffic light government for the current year. They asserted that an incorrect accounting system persists in parts of the budget, as stated by CDU/CSU deputy group leader Mathias Middelberg in the Bundestag.
The Supplementary Budget and the 2024 Financial Year
Middelberg also expressed disappointment in the agreement struck by the traffic light coalition for the 2024 financial year, labeling it as an insufficient compromise for the nation. The deal serves as a rescue package for the traffic light government, according to Middelberg. He bemoaned the significant tax and duty increases included in the agreement.
Coalition Defends Budget and Compromise
Parliamentary groups within the coalition government defended the current year's supplementary budget and the compromise concerning the 2024 budget. Green Party budget officer Sven-Christian Kindler expressed support for the supplementary budget, stating that it ensures compliance with the Federal Constitutional Court ruling for 2023.
Upcoming Budget Adjustments
The revised budget originates from the Federal Constitutional Court's judgment. The court ruled that the federal government cannot reserve loans for future years, which is precisely what the traffic light government did in relation to the energy price caps and flood aid.
Parliament now aims to create a stable foundation for the budget by suspending the debt brake, an amendment enshrined in Germany's Basic Law.
Bad Apples in the Bunch
SPD budget officer Dennis Rohde contends that the Russian President, Vladimir Putin, violates state integrity on the European continent.
Reform Commission Called for
Baden-Württemberg's Finance Minister Daniel Bayaz and Berlin's Finance Senator Stefan Evers have advocated for the creation of a reform commission to evolve the debt brake. This commission would constitute representatives from various universities and federal and state governments to further develop the debt brake's frame.
Federal States Seek More Flexibility
The debt brake is under scrutiny following the budget turmoil at the federal level. Berlin's City Mayor Kai Wegner (CDU) proposed launching a reform initiative in the Bundesrat, amid talks among federal states to embrace a reform agenda.
Insights
Beginning in 2009, the debt brake, or 'Schuldenbremse,' has been a constitutional rule to restrict Germany's federal deficit to 0.35% of GDP and restrict new net debt incurred by the federal states to 0.15% of GDP.
Recently, political tensions have arisen among parties regarding the suspension and reinstatement of the debt brake in certain years, particularly in the context of the COVID-19 pandemic. The SPD, Greens, and BSW advocate for loosening the debt brake to facilitate investment and social policies, while the CDU/CSU, FDP, and AfD support preserving or tightening fiscal rules.
The EU Stability and Growth Pact (SGP) has also influenced the German debt brake, as both rules aim to ensure fiscal discipline and promote financial stability in Europe. These frameworks may attract criticism due to unforeseen circumstances such as economic crises or extraordinary exigencies.
Sources
- The CDU/CSU has voiced constitutional concerns about the supplementary budget for the current year, with an incorrect accounting system in parts of the budget.
- Mathias Middelberg, a CDU politician, is critical of the agreement reached by the traffic light coalition for the 2024 financial year, denouncing it as a "not good compromise" and a "rescue package."
- The CDU/CSU advocates implementing the climate money agreed upon in the coalition agreement, arguing that it's the decisive step toward social equalization.
- Green Party budget officer Sven-Christian Kindler defends the supplementary budget, stating that it allows the federal government to comply with the ruling of the Federal Constitutional Court.
- The parliamentary groups in the coalition government defend both the supplementary budget and the compromise for the 2024 budget.
- The Federal Audit Office also considers the supplementary budget unconstitutional, expressing concerns about when loans are counted towards the debt brake.
- The supplementary budget is a result of the ruling by the Federal Constitutional Court, which prohibits the federal government from reserving emergency loans for later years.
- Baden-Württemberg's Finance Minister Daniel Bayaz and Berlin's Finance Senator Stefan Evers advocate for a reform commission for the debt brake.
- The debt brake is being criticized in the wake of budget chaos at the federal level, and there are ongoing discussions about launching a reform initiative in the Bundesrat.
