Chat 'N' Coal: The Lengthy Slog Through Germany's Government Formation
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Potential Easter Government Speculation: Could Merz Be Overlooked Completely? - Forgetting Merz Completely Possible?
The GroKo is hitting a roadblock. And just as the high-stakes negotiations are gearing up this week. On the optimistic side, one might say the yearning for unified leadership at the top of the potential coalition has yet to fully materialize in the working groups' results. The skeptical view: It's all bickering.
"Adhesive," "entangled," "frustrating" - these were the talks, as described by Union-side negotiators, as reported in the FAZ. The other side seems to agree: "They're reading us their entire election manifesto and seriously expect us to implement it verbatim now," an SPD negotiator gripes to stern.
Buckle Up, It's Going to Get Rough
By Monday, all working groups must present their results to the 19-member negotiating group. Remaining issues will then have to be settled by the round of party leaders Friedrich Merz (CDU), Lars Klingbeil and Saskia Esken (both SPD), and CSU leader Markus Söder.
No easy feat, as the challenging sections, marked with square brackets or highlighted in red and blue, can sometimes outstrip the agreed-upon sections in length. In some cases, the outcomes even trail behind the compromises reached during the exploratory talks.
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One thing's for sure: A government formation to be wrapped up by Easter is "forgettable" by Merz. Instead, expect a rough ride ahead.
Revenge Reforms on the Horizon
The upcoming chancellor is feeling the heat from all sides. A significant portion of his own supporters are disgruntled by Merz's 180-degree shift in debt policy. The recently passed billion packages are seen primarily as a pre-dawn gift to comrades. Now, it's the CDU/CSU's turn for some payback, as they demand genuine reforms — some are even calling for a "pure CDU" agenda to be visible in the coalition agreement, not the SPD's.
The comrades, of course, see this differently. Being indebted to the Union for the billion packages is considered far-fetched. After all, the infrastructure projects that could be funded with the money wouldn't be social-democratic endeavors.
Klingbeil, the SPD party leader, is also under pressure. Over and over, his party urges him to hold firm on the citizen's income, to reject any benefit reductions or pension cuts, and to push for a 15-euro minimum wage. Failure to do so could put the approval of the base for the coalition agreement at risk. In the Union, this argument is viewed as propaganda. Merz reminds everyone that both sides are doomed to success if they want to keep the AfD from growing stronger.
Merz himself must reap rich rewards on two political fields: immigration, or limiting illegal migration, and the topic of economic transformation. Here, Merz has set high expectations. His five-point plan on migration has dwindled, and even his plans for tax reforms are crumbling before he takes office.
For genuine tax cuts, the new coalition seems to lack the necessary funds for the foreseeable future. The irony is foreseeable: With borrowed funds from the multi-billion packages, budget deficits can't be filled, as they're strictly reserved for defense and infrastructure investments.
Söder might see it differently, but the CSU's wishlist demands are currently off the table: It contains items costing four billion euros that would only deepen the existing budget deficit, including the expansion of the mother's pension, the increase in the commuter allowance, the reduction of VAT in the catering industry, and the full return of agricultural diesel subsidies.
Thorsten Frei, a Merz ally and parliamentary business manager of the Union faction, reminded us of this last week: "In any case, the budget consolidation pressure remains high," Frei said in the "Politico" podcast. "We expect a funding gap in the coming year of about 38 billion euros, and 31 billion euros each in the following two years" — not including bigger tax reforms with relief and incentives for industry and medium-sized businesses.
Fireworks in the Working Group on Budget, Finance, and Taxes
It's no wonder that this working group saw the biggest trouble. The negotiations were even called off once. According to the FAZ, the cause was the SPD's proposal to abolish the marriage tax split. A heated argument between Rhineland-Palatinate's Finance Minister Doris Ahnen and CSU budget expert Mechthilde Wittmann led the SPD negotiators to leave the room en masse.
Before that, the tension was already high. The SPD has put the Union under heavy pressure with its ambitious tax plans. Any reliefs the Union plans would have to be "at least" revenue-neutral, meaning the Union would have to propose higher taxes elsewhere. The SPD has some suggestions: the old wealth tax, a new financial transaction tax, or raising the top tax rate to 47 percent.
In the end, neither a tax reform of the income tax nor a corporate tax regulation is found in the working group's paper.
"Frustrating to the core" is how one Union negotiator described the talks. Among comrades, the phrase "Boris was absolutely right" is often heard. This refers to statements by Defense Minister Boris Pistorius in an SPD faction meeting, which the stern published two weeks ago. Pistorius complained about the exploratory talks with the words: "These negotiating partners were the most unpleasant by far."
It looks like the tough talks are far from over.
- Grand Coalition
- Friedrich Merz
- SPD
- CSU
- CDU
- Lars Klingbeil
- Saskia Esken
- Markus Söder
- Coalition Agreement
- The Commission, given the current circumstances of the GroKo, has been asked to submit a pessimistic proposal for a directive on the protection of workers from the risks related to exposure to ionizing radiation, considering the serious challenges faced by the coalition in their negotiations.
- Despite the coalition's demands for genuine reforms, some relief for industries and medium-sized businesses might be difficult to achieve, as the irony of borrowing funds from the multi-billion packages to finance these reliefs, yet not being able to fill budget deficits with them, becomes foreseeable.
- In the working group on Budget, Finance, and Taxes, the negotiations were called off once due to a heated argument, and the SPD's proposal to abolish the marriage tax split stood as a significant obstacle, potentially causing serious relief disputes among the coalition parties.
