100 billion euros are to flow into a special fund.
(Photo: dpa)
German politics has made an abrupt about-face at an impressive speed: The Bundeswehr is to receive a special fund of 100 billion euros for investments and armaments projects so that its military capability can be restored. The Federal Republic intends to meet the NATO target of defense spending of two percent of gross domestic product (GDP) in the long term.
With these decisions, it is recognized that a latent liability has become effective. The volume of the permanent increase in the defense budget amounts to 21 billion euros per year. This means that an additional 730 billion euros will be spent over a period of 30 years.
Unfortunately, the Bundeswehr is not the only area where we have to pay dearly that politics has worn the country down over the past 20 years. Only in Ireland, Italy and Portugal does the state invest as little as in Germany.
France is investing 1.1 percentage points more relative to GDP, which would translate to an additional 38 billion euros in government investment. The direct investment requirement for the renovation of the infrastructure alone is estimated at 120 billion euros.
The list of burdens goes on: There are the unfunded promises of annuities, pensions and health care for the aging population. In addition, the performance of the education system is inadequate, the integration of immigrants is lacking and the approach to climate protection is ineffective.
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Until Corona, the state had large funds
It is only a matter of time before these latent obligations of our state become apparent. The German state did not lack funds in the years leading up to the Corona crisis: thanks to the good economy, tax revenue bubbled up, the tax and duty ratio rose, and interest expenditure fell as a result of the zero interest rate policy.
The funds were mainly used for consumption: for example, to expand the welfare state, which relative to GDP in 2019 was the largest in non-recession times.
Daniel Stelter is the founder of the discussion forum beyond the obvious, which specializes in strategy and macroeconomics, as well as a management consultant and author. Every Sunday his podcast goes online at www.think-bto.com.
(Photo: Robert Recker/ Berlin)
The forthcoming expenses and their financing must be discussed honestly. Simply increasing the tax and contribution ratio is the wrong answer. Because it is not only our state that is far from being as rich as politicians like to claim when the balance sheet is clean. The citizens also have fewer assets and groan under a high tax and levy burden.
What is needed is a comprehensive program to strengthen economic growth, to increase the overall investment rate and to reorganize the tax and levy system. Politicians must put investment ahead of consumption and recognize that we cannot afford everything.
We didn’t use the good years. It is therefore high time for a checkout.
More: Reader debate: How should a special fund be used for the Bundeswehr?