The traffic light coalition intends to “further develop the fiscal policy rules” in the euro area for “sustainable and climate-friendly investments”.
(Photo: imago images / Chris Emil Janßen)
The financial tricks of the new federal government have little to do with proper bookkeeping. Corona special funds filled with loans are being reallocated, shadow budgets are being replenished, and state-owned companies are obtaining loans directly. The rest is organized by the state credit institute for reconstruction (KfW). All with the aim of investing more in the country and implementing extensive climate protection measures.
As problematic as the approach is from a transparency point of view, the correct aim is to finance the expenses through higher debts. Even after Corona, Germany has little debt in international comparison, can finance itself at significantly negative real interest rates and shares the currency with countries that, despite much higher debt, make no move to limit new debt. Anyone who focuses on saving in this environment is stupid.
Politicians are forced to follow this approach by the constitutionally anchored debt brake. It has never made economic sense and threatens to cause more damage than good.
On the one hand, the suddenly abundant means of the politicians threaten to lead to an effect à la “child in the candy store”, which favors expenditures that – for example in terms of climate protection – have little concrete benefit but are popular. The urgently needed return to the efficiency and effectiveness of government trade would be even more difficult.
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On the other hand, there is a risk of continuation at European level. The traffic light coalition intends to “further develop the fiscal policy rules” in the euro area for “sustainable and climate-friendly investments”.
Reform the debt brake
This opens the door for a European climate fund that could also be used to circumvent local debt limits. In view of the associated redistribution within the EU, such a debt would cost us very dearly via the detour to Brussels.
Daniel Stelter is the founder of the discussion forum beyond the obvious, which specializes in strategy and macroeconomics, and is a management consultant and author. Every Sunday his podcast goes online at www.think-bto.com.
(Photo: Robert Recker / Berlin)
In the coming years, politicians in Berlin should rather push their way across party lines to reform the debt brake. Proper accounting for federal assets, as planned by the traffic light, would be an important step towards transparent accounting as the basis for more intelligent debt rules.
However, there is a great temptation to cover up the financial consequences of decisions. Here, too, the coalition agreement offers an example. The considerable assets of the statutory pension insurance are used to maintain the illusion for a further four years that, despite increasing life expectancy and a shrinking workforce, the retirement age, pension amount and contribution rates can be kept stable. The next federal government then inherits the problem.
More: Federal Audit Office President criticizes the traffic light budgets