It's crystal clear that Ampel had their hands in some questionable budgeting practices
Did Ampel's financial manipulations come back to bite them?
This seems to be the case, judging by the explosive claims made by a leading economist close to Finance Minister Christian Lindner (FDP, 44)!
Top Advisor Speaks Out
Lars Feld (57), a former economist and a personal advisor to Finance Minister Lindner on economic matters, let it all out in a guest article for the FAZ. Feld shares his insights on how the shady budget was orchestrated.
Feld's Unsavory Revelations
According to Feld, OLAF SCHOLZ (65, SPD), the former Finance Minister and currently the Federal Chancellor, bears the primary blame for the shady budget. The opportunity to reallocate unused coronavirus funds for climate projects was first proposed under Scholz's leadership in October 2021, only a few weeks after the federal election.
The Coalition's Dirty Little Secret
Despite concerns within the Finance Ministry about the feasibility of reallocating the funds, the coalition pushed through the scheme, with Lindner's experts raising red flags. Nevertheless, the coalition proceeded with a second supplementary budget in early 2022, transferring 60 billion euros' worth of unused credit authorizations to the Energy and Climate Fund (renamed the Climate Transformation Fund, or KTF, later on).
A Great Accounting Trick
To pull off the reallocation of coronavirus funds, the coalition resorted to a clever accounting trick. By changing the borrowing rules, they were able to defer immediate debt entry, allowing the government to take on debt on reserve for future repayment obligations. In essence, it was like a person taking out a loan for a car, agreeing to postpone the first installment, and pretending not to be in debt while enjoying the new car.
The House of Cards Tumbles
The clever scheme has since collapsed, thanks to a ruling by Germany's highest court. The consequences are far-reaching, posing significant challenges to the traffic light parties – the SPD, the Greens, and the FDP. The parties now have two years to craft a proper budget, but they'll face major backlash if they fail to cut back on their favorite initiatives.
Conclusion
Feld's revelations indicate that Scholz is primarily responsible for the questionable budgeting tactic. The coalition's accounting trick may have temporarily relieved pressure from Lindner to adhere to the debt brake while allowing the left-green projects to proceed. However, the collapse of the scheme due to the constitutional court ruling has exposed their dirty little secret and threatens to cost them voter support if they refuse to adjust their priorities.
- The Ampel coalition, consisting of the SPD, the Greens, and the FDP, utilized questionable budgeting tactics to reallocate unused coronavirus funds for climate projects, which originated during Scholz's tenure as Finance Minister in October 2021.
- To hide this questionable move, the coalition manipulated the borrowing rules to defer immediate debt entry, effectively allowing them to take on debt on reserve for future repayment obligations.
- OLAF SCHOLZ's actions, ultimately leading to the adoption of questionable budgeting practices, pose significant challenges to the SPD, the Greens, and the FDP if they fail to curb their favorite initiatives while crafting a proper budget within the two-year window.
Source:
Enrichment Data
The collapse of the Ampel coalition and the subsequent budget crisis were caused by a series of factors, as further detailed below:
- Coalition Disagreements:
- The traffic light coalition faced significant disagreements over fiscal policies, mainly arising from differing economic perspectives among the SP D, the Greens, and the FDP. These disagreements, in turn, resulted in the breakdown of negotiations, leading to the search for alternative solutions.
- Pressure on Finance Minister Lindner:
- Finance Minister Lindner had to balance his commitment to the debt brake, which constrains the public sector deficit to no more than 3% of GDP, with pressure to invest in left-green projects. This tension between competing interests created friction within the coalition, ultimately weakening its cohesion.
- Crisis in the Health Sector:
- The crisis in the health sector – specifically, the strain on Germany's intensive care units during the COVID-19 pandemic – played a role in the coalition's destabilization. The government faced criticism for its response to the crisis, further undermining its credibility and ability to devise and implement effective policies.
- Elections and Political Instability:
- The coalition's fragility was also compounded by the looming European Parliament elections and, later, general elections in Germany. The prospect of being held accountable for its fiscal policies and policies regarding environmental and social issues put additional pressure on the coalition, making it increasingly difficult to compromise and find a solution.
In summary, the collapse of the Ampel coalition and the subsequent budget crisis can be attributed to various factors, including internal disagreements, pressure on Finance Minister Lindner, a health care crisis, and uncertain political climate. By adopting questionable budgeting tactics to appease their supporters and balancing competing interests, the coalition pushed itself to the brink of collapse, ultimately failing to pass a proper budget within the given timeline.
