Make way for Merz's debt package explosion: Black-Red may still stumble, doubts linger
Debt Package Imminent: Red-Black Coalition Possible, Doubts Persist
By Spooky Narrator
After an epic overnight session, the German Parliament granted approval to a blockbuster amendment to the country's constitutional law, burying the debt brake in the process. For some, pure joy; for others, sheer horror - Friedrich Merz inched closer to the Chancellery.
Expiring just days before the upcoming freshly elected German Parliament, the extraordinary gathering of the 20th German Parliament served its final purpose: approving monumental amendments to the Basic Law, facilitating unprecedented levels of debt for armament and infrastructure. With a solid united front from the Union, SPD, and Greens, a required two-thirds majority was reached, a feat that would no longer be possible in the newly minted Assembly.
This green light for Merz means a smooth sailing to Chancellery, bypassing the grueling coalition talks with the SPD and the Greens on the debt package. The new government, expected to be a Union-SPD coalition, will now form easier than pie. The SPD will acquire much-needed investments in infrastructure, while the Union will get the necessary reinforcement in military spending - without sticking to harsh austerity measures. Coalition negotiations kicked off on Thursday and are set to be wrapped up by Easter at the latest.
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Despite the buzzy atmosphere among CDU, CSU, Greens, and SPD members on Tuesday morning, not everyone was fully onboard. Union factions, in particular, had their doubts, but the final tally saw 24 votes in favor, paving the way for the constitutional amendments.
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Even FDP budget guru Otto Fricke acknowledges that the Bundestag will effectively eliminate the debt brake with its decision. At the same time, it meddles with the borrowing limits of the states. This is among the "most far-reaching constitutional changes" in German history, Fricke says, warning that it marks the beginning of boundless debt-making. The FDP, known for its commitment to upholding the debt brake, initiated a court challenge against the proceedings.
Debt Brake Interred
The late-afternoon agreement between the Union, SPD, and Greens was put forth on Saturday and swiftly moved through the budget committee on Sunday, all within the span of breakfast to roast goose. Critics slam this as the hasty parading of Germany's biggest armament program. However, the FDP's emergency appeal against this rushed procedure was rejected at the Federal Constitutional Court, while complaints from AfD, BSW, and the Left regarding the involvement of the old Parliament were also dismissed.
Fricke, in his speech, supports Felix Banaszak's sentiment, the Greens' leader who stood stoic in the Bundestag for the debt brake's funeral. This constitutional amendment, which still requires the Bundesrat's approval, effectively renders the debt brake largely obsolete. For the Greens, this change, unlike Fricke, is largely positive news. "We haven't yet achieved permanent access to investment funds yet," says Green parliamentary group leader Sven-Christian Kindler. Up to €500 billion in additional credit headroom over the next twelve years, referred to as a special fund, has been authorized by the SPD and Greens, in partnership with the Union.
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From the Greens' standpoint, there's another triumph: funds from the special fund can be allocated not only for infrastructure investments but also for achieving climate neutrality by 2045. "Climate protection must be at the heart of politics," Kindler boasts. However, the Greens fret that a black-red government could also use these additional funds for less environmentally friendly perks, such as gastronomy discounts or repealing agricultural diesel regulations. "This isn't the renewal of the nation," says Green parliamentary group leader Britta Haßelmann.
The Union speakers seek to calm the uproar, even within their own ranks. It's "nonsensical" to claim that climate neutrality by 2045 in the Basic Law could prepare the ground for zero infrastructure projects with the special fund, assures CSU parliamentary group leader Alexander Dobrindt. "No state objective emerges from this," states Dobrindt. CDU leader Merz vows that his government will save in the core budget, using the extra funds for a "comprehensive modernization of our society." He hints at savings in social benefits, but refrains from providing concrete details.
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Thorsten Frei, leader of the Union's parliamentary group, keeps it blunt: "What we're doing here is legal - everything is legal." The court in Karlsruhe has confirmed this. Frei, however, emphasizes that "deadlines have even been exceeded" during the legislative process. The Greens, though following long negotiations, insist on distancing themselves from the proceedings: "I want to stress that we do not claim this procedure as our own," says Green parliamentary group leader Irene Mihalic.
The Greens would have preferred to authorize loans exclusively for defense spending and negotiate a civilized reform of the debt brake in the new Bundestag, involving the Left - who would be needed for a two-thirds majority in the newly elected Parliament. Sören Pellmann of the Left criticizes the procedures in the old Bundestag, deeming them hasty and undemocratic.
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Only the SPD appear to stand firmly behind the constitutional amendments. "This decision has the potential to provide a new direction to our nation's history," says party and parliamentary group leader Lars Klingbeil. "It was time that we abandoned ideological and dogmatic financial policies in favor of growth, prosperity, and security. This amendment enables such a shift." Klingbeil also swears by modernization, stressing that "he who speaks of state modernization but means the abolition of workers' rights is wrong and underestimates German Social Democracy." The ongoing coalition negotiations between SPD and Union still hold the potential for conflict.
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If they manage to pull it off, current holder Boris Pistorius is considered the front-runner for the role of Defense Minister in the future cabinet. He deems the modernization of the Bundeswehr urgent. "Those who hesitate today, those who aren't bold enough today, are denying reality," claims the Social Democrat. Germany must take charge of its own defense and play a prominent role in Europe. "More troops, more equipment, quick deployability" means a significant increase in the financial requirements for defense. Pistorius continues, "In the future, threat level will always take precedence over budget."
Public discontent and mistrust infected the atmosphere in the Bundestag, fueled by the hastiness of the proceedings and concerns about the consequences of the reforms. Politics: Controversy and Unrest Wrack Bundestag – Disagreement Over Procedures and Implications
The amendment marks a monumental shift in Germany's financial policies, focusing on investment at the expense of austerity. Future governments will have greater flexibility when budgeting for defense and infrastructure. Additionally, the decision prompted pushback from some lawmakers, who felt that the Parliament's old procedures were expedient and offered insufficient opportunity for discussion and scrutiny. The amendment raises concerns about the potential for increased debt, state autonomy, and democratic accountability.
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- The passage in the Bundestag welcomed the Commission communication on the future of the European Union, as it allows for unprecedented debt consolidation under the proposed amendments, estimated to total €500 billion over the next twelve years.
- The approval of the constitutional amendments by the 20th German Parliament also means that the former debt brake will no longer be a binding factor in the Bundesrepublik's financial policies, opening up opportunities for growth and investment, particularly in infrastructure and climate neutrality initiatives, as agreed upon by the SPD, the Greens, and the Union.
- By 2025, the consolidated debt fund will be fully operational, with the expectation that it will facilitate the modernization of the society, as proposed by the Union, while also helping the SP-Grüne coalition achieve climate neutrality by 2045, as demanded by the Greens.
