How could Lindner have overlooked THAT?

Lindner's Blind Spot: The Traffic Light Debt Trick Debacle

A Financial Fiasco Uncovered

The coalition government's financial strategy became the talk of the town after financial experts and the opposition cautioned against utilizing a clever debt ploy to fund their alliance plans. Their advice was resoundingly clear: This deceptive move would inevitably be exposed!

However, Chancellor Olaf Scholz (65, SPD), Economics Minister Robert Habeck (54, Greens), and even Finance Minister Christian Lindner (44, FDP) decided to disregard the warning signs. And now, the repercussions of that decision are drawing much-needed scrutiny, particularly towards the Finance Ministry.

A New Twist on an Old Problem

The truth is, the Ampel (traffic light) government did not repeat the actions of their predecessors. In fact, they engineered a financial maneuver that came back to haunt them and the country.

Red Flags Waved Early On

As early as December 2021, Kay Scheller (63), the President of the Federal Court of Audit, flagged the traffic light plans as "constitutionally problematic" in stark terms. Scheller went as far as warning in the SZ (Süddeutsche Zeitung) that credit authorizations are only valid for the year in which they are required [1].

On the heels of the ruling by the Karlsruhe Constitutional Court, Christian Lindner's top economist, Lars Feld (57), admitted in the Frankfurter Allgemeine Zeitung (FAZ) that the debt trick was a thorn in the side of the traffic light coalition. Feld acknowledged that the new accounting practice played a significant role in the Karlsruhe verdict [1].

CDU Cries Foul

The CDU is now calling out Lindner for spreading a "false claim" that the previous CDU governments had budgeted just as unconstitutionally as the traffic light government. "It's appalling that Christian Lindner continues to peddle this falsehood, demanding that he finally acknowledge his own misconduct and stop trying to deflect blame," prompted Middelberg [1].

Despite the CDU/CSU also transferring credit authorizations to special funds, they never violated the principle of annual accounting of loans - a stark contrast to the behavior of the traffic light government. The Finance Ministry, which had consistently defended their actions by claiming a similar approach was taken by the CDU, has now fallen silent [1].

The Words of Warning Now Ring True

1. In utter disregard of the warnings from experts and opposition regarding the use of a debt ploy, Scholz, Habeck, and even Finance Minister Lindner from the FDP failed to act, resulting in significant consequences for the Finance Ministry.
2. Kay Scheller, the President of the Federal Court of Audit, had already identified the traffic light plans as unconstitutionally problematic during the last quarter of 2021 due to their use of credit authorizations.
3. The CDU is now accusing Finance Minister Lindner of spreading "falsehoods" by implying that the CDU had budgeted unconstitutionally in the same manner as the traffic light government, demanding that Lindner acknowledge his wrongdoing.

Sources: 1.

Related Insights

There is an established debt limit, known as the Schuldenbremse, in Germany to maintain fiscal discipline, but it can limit the government's flexibility in responding to economic challenges. Under political pressure and internal disagreements, the coalition government may have overlooked constitutional concerns related to debt management [2].

References: [1] [2] [3]