North Rhine-Westphalia’s Prime Minister gets into trouble due to the advance of the Federal Minister of Finance.
(Photo: Imago Images)
Berlin Finance Minister Christian Lindner’s (FDP) plan to free heavily indebted towns and communities from their old debts has met with resistance from those around him.
Ironically, Lindner’s chief economic advisor, Lars Feld, doesn’t believe in the idea. “The proposed relief for highly indebted cities and municipalities gives the federal states the wrong incentives,” Feld told the Handelsblatt. “It cannot be that the federal government steps in for individual states.”
Lindner announced his plan on Sunday that the federal government could take over half of the old municipal debt. “We now have to excuse the municipalities affected so that there is scope for investment,” the FDP politician told the newspapers of the Funke media group.
From the point of view of his chief adviser Feld, this does not make sense. The financial situation of the municipalities is the original task of the federal states. “The states are milking the federal government, and have been for a very long time,” explained the Freiburg economist. With every single measure that the federal government decides on, “they hold out their hands and want to be paid in full”.
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However, the federal states should not be released from their responsibility. Municipalities in Saarland, Rhineland-Palatinate and North Rhine-Westphalia in particular have problems with high debts. “Each of these countries manages to relieve its municipalities on its own in an incentive-compatible manner,” says Feld.
Lindner has to convince the Union and the states
The traffic light coalition had listed the debt relief project in the coalition agreement. Lindner now also wants to change the Basic Law. It must be prevented that the municipalities immediately accumulate new debts after a one-off debt relief. But this plan harbors two problems, with the Union and with the countries.
There was some turmoil around the economist recently because of his departure as an economist.
(Photo: dpa)
A two-thirds majority in the Bundestag is required for a constitutional amendment, i.e. votes from the opposition. The timing of Lindner’s push is hardly surprising, as it puts the Union in a precarious position.
A new state parliament will be elected in North Rhine-Westphalia on Sunday. The federal state has the biggest problems with old municipal debts. Prime Minister Hendrik Wüst (CDU) is in trouble. On the one hand, it will cost him votes if he cancels the money from the federal government. On the other hand, involvement of the Union would be a sign of weakness for his party.
Chancellor Olaf Scholz (SPD) had campaigned vehemently in the last legislative period, when he was Finance Minister, for the municipalities to be relieved of their old debts, but was unable to assert himself against the resistance of the Union.
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Wüst’s challenger in North Rhine-Westphalia, Thomas Kutschaty, uses the opportunity to push Wüst in front of him. “For the NRW of tomorrow, we must finally seize this opportunity,” said Kuchaty on Monday about Lindner’s plan.
In addition to the Union, Lindner also has to convince the federal states in the Bundesrat. In countries with less heavily indebted municipalities, such as Baden-Württemberg, there has already been resistance to considerations of relieving old debts. Hamburg’s finance senator Andreas Dressel (SPD) now says: “Hamburg will contribute in solidarity – but the city-state’s interests should not be lost sight of.”
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