Strengthening Coalition Struggles over 2022 Budget Planning
Will the striking traffic light coalition manage to decipher its spending plans before the year ends? Today, Federal Chancellor Olaf Scholz (SPD), Economics Minister Robert Habeck (Greens), and Finance Minister Christian Lindner (FDP) convened for another round of budget discussions — but the end is uncertain. One thing remains clear: the timeframe for this agreement is shrinking.
Government spokesperson Steffen Hebestreit balances his optimism carefully. The federal cabinet may well discuss the potential plans before Christmas, Hebestreit assured in Berlin. However, it's increasingly improbable that the budget will meet a parliamentary discussion deadline.
Budget Delays: Wednesday's Cabinet Referral Missed the Mark
Originally, the cabinet meeting scheduled for Wednesday morning aimed to reach an agreement, ensuring a smooth process before Christmas. Yet, it was soon evident that such consensus would not be reached. The talks must continue.
Regarding a cabinet decision, Hebestreit mentioned the possibility of a resolution by written majority, which could potentially materialize "very soon." However, he could not grant a specific date for this outcome. Flexibility regarding timing has always been necessary within this coalition.
If the federal cabinet reaches agreement, the Bundestag Budget Committee will require additional days to address the new plans before the general assembly can subsequently debate the matter. An ideal scenario calls for a special budget week in the Bundestag, culminating directly before Christmas. The Bundesrat could then endorse the plans on December 22. Alternatively, it is conceivable that only the Budget Committee will discuss the budget before Christmas; the Bundestag will then approve the budget in January.
Narrowing Window for Negotiations
However, securing a fundamental political accord remains top priority. Time must first be made available for this critical step. Despite Habeck's decision to abandon his planned trip to the Dubai World Climate Conference, Olaf Scholz and ranking SPD members have a hectic schedule. Lindner is due to attend the EU finance ministers' meeting in Brussels on Thursday afternoon, according to his ministry's spokeswoman.
The untimely ruling by Germany's highest court has exacerbated the situation. The Karlsruhe decision rendered a budget reallocation null and void, causing a 17-billion euro hole in next year's budget. This deficit is attributable not only to the ruling itself, but also to factors such as a planned electricity tax reduction to ease manufacturing strain and increased basic income support.
Sparing Measures and Budget Alternatives
Cost-cutting measures are being weighed, while the suspension of the debt brake for 2024 remains under consideration. The compelling argument for this apparent simple solution, requiring an emergency resolution in the Bundestag, has yet to persuade Lindner. The SPD and the Greens are advocating for this suspension.
In an interview with BR broadcast on Tuesday, Green Party leader Ricarda Lang warned that the modernization of the nation and the shift towards a climate-neutral economy must not falter. "This comes down to nothing more than jobs, prosperity, and security for our citizens," she said.
Resolutions must be found that satisfy each of the three coalition partners, aiming to avert a national crisis. However, the Greens have drawn a line in the sand against granting concessions to the poorest sectors of society. Lindner, in turn, sees further savings potential in social spending, which makes up 45% of the federal government's expenditures. He underscored: "Increases in taxes must remain off the table."
Additional Insights
The German traffic light coalition's collapse in November 2024 significantly influenced the 2024 budgetary proceedings. The Regionalisation Act, which was pivotal for securing Deutschlandticket funding, underwent revision in December 2024 following the coalition's dissolution and under the urgency of ensuring ticket funding until 2026[1].
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