Berlin One thing was always particularly important to Olaf Scholz (SPD) during his time as Federal Minister of Finance: the amount of investment in the budget. He raised it to a record level, around 50 billion euros, and stabilized it. Scholz then likes to speak of “future tasks” that are covered in the budget.
However, it is difficult to differentiate between investments in the household. This includes dubious subsidies such as child benefit, as well as corona-related budget grants to the Federal Employment Agency. Personnel expenses for basic research or education, on the other hand, do not count as an investment.
Economists from the Leibniz Center for European Economic Research (ZEW) have now developed an approach as to how investments can be represented better and more precisely in the budget: by means of a so-called “future quota”. The study, which the ZEW carried out on behalf of the Federal Ministry of Education and Research, is available to the Handelsblatt.
The future rate indicates “the extent to which the budget provides funds for goals that will only be of use in the medium or distant future,” says the study. The ZEW researchers calculated it right away.
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In the 2019 federal budget, the last budget before the corona pandemic, the future rate was 18.3 percent. 65.3 billion euros were therefore future expenditures. The budget totaled 356 billion euros.
Traffic light should measure your policy against a new quota
ZEW recommends using such a future quota regularly in the future. From the point of view of the project manager and ZEW researcher Friedrich Heinemann, the concept is particularly suitable for a possible traffic light alliance.
Finally, the SPD, FDP and the Greens have announced that they want to form a “progress coalition”. “Especially a new government that has declared that it wants to tackle the country’s future tasks more intensively, must have its financial policy measured against such an indicator,” says Heinemann.
No budget indicator is perfect, says Heinemann, “but our future quota can actually provide parliaments with a new and helpful orientation mark to quantify the performance for the next generation on the expenditure side of the budget in a comprehensive way”.
First of all, the ZEW experts calculated the future quota for households in 2019 and 2021. After 18.3 percent in 2019, the rate in the 2021 budget fell to 17 percent or just under 85 billion euros.
The future orientation of the budget tends to increase
This is mainly due to the many Corona rescue programs, through which the federal budget rose to 548 billion euros. This also explains why the absolute sum of future expenditures increased, but the rate fell.
In the long-term trend, however, the development is surprisingly positive. Since the early 2000s, the data have indicated that the future orientation of the federal budget has tended to increase – despite the expansion of many social programs and rising pension expenditure.
The reason: spending on research and development as well as on investments grew faster than social spending, the rise of which was rather moderate due to the good employment situation, because the state had to spend less money on unemployment benefits, for example.
Scholz prides himself on the fact that the federal government’s “future expenditures” have increased during his term of office.
(Photo: AP)
The starting point of the ZEW study is a systematization of expenditure in the federal budget. “The future quota includes positions that contribute to the maintenance or improvement of physical, natural and human capital or technical knowledge,” says the study. These can be classic investments in research and education. But also personnel expenses, if they make an environmental contribution, promote innovations or improve the education system.
However, it does not include expenditures that focus on present-day benefits or that are used to finance past burdens. One example of this is the subsidies from the federal budget to the pension fund.
Will politics take up the proposal?
The future expenses can still be weighted differently, depending on the benefit, for example, only 25 percent or completely. In the study, ZEW outlined four possible configurations of the quota: They differ in the question of whether future expenditures are defined as narrowly or more generously. In addition, there is a quota in which investments are always included, in another, some, whose future utility is not so great, are only included at 50 percent. ZEW recommends the approach in which capital expenditure is also weighted according to benefit.
The ZEW experts then developed an algorithm that can be used to calculate the future quota in budgets of more than 3000 pages. The “Research and Development” commission of experts made a similar proposal in this year’s report.
Originally, the proposal for a future quota comes from Union parliamentary group leader Ralph Brinkhaus in order to set in motion more investments in education, research, new technologies, environmental and climate protection and modern infrastructure. But whether such a quota is actually introduced is no longer in the hands of the Union – but in that of Robert Habeck (Greens) or Christian Lindner (FDP). One of the two will be the future Federal Minister of Finance. Unless the traffic light disintegrates surprisingly.
More: This is really how it is with the federal budget.