Chancellor dissatisfied with the coalition: “There must be more”

The CDU-SPD coalition is experiencing tensions ahead of the announced "autumn of reforms." Chancellor Friedrich Merz ( CDU ) summed up the situation this weekend: "I am not satisfied with what we have achieved so far. We must do more." Referring to the welfare state, CDU General Secretary Carsten Linnemann said that the "autumn of reforms" would determine whether politics is even capable of reform. The SPD leadership reiterated demands that top earners pay higher taxes. The reason for this is the billion-dollar gap in the 2027 budget.

The coalition government of the CDU, CSU, and SPD has been in office since the beginning of May. Merz said on Saturday at a CDU Lower Saxony party conference in Osnabrück that although a new migration policy and impetus for an economic turnaround had been initiated, the Chancellor nevertheless expressed his dissatisfaction. To demonstrate that Germany can be successfully governed from the center, he would like to see an SPD that continues the common path of being "critical of migration and pro-industry," the Chancellor demanded.

In addition, the coalition's communication must improve. The CDU leader called on both the SPD and his own party to talk to each other, not about each other. The failed election of new judges to the Federal Constitutional Court before the summer recess had caused particular conflict within the coalition. There were also broad debates about the decision not to reduce the electricity tax for everyone, contrary to the announcement in the coalition agreement.

Currently, tax policy is the main source of controversy. Even after criticism from the CDU/CSU, Vice Chancellor Klingbeil is sticking to his line. He told the newspapers of the Funke media group that, as Social Democratic Finance Minister and party leader, he holds a fundamental conviction: "People with very high assets and incomes should do their part to ensure a fairer society. Especially in these extreme times." If CSU leader Markus Söder or CDU/CSU parliamentary group leader Jens Spahn have other ideas on how to close the €30 billion budget gap, he would be happy to listen, Klingbeil said. SPD economic expert Sebastian Roloff, writing in the "Handelsblatt," added that it is "only fair to tax top earners, for example, above €20,000 a month, a little more." The CDU/CSU had already referred to the coalition agreement, which does not provide for any tax increases. Merz said in Osnabrück: "With this federal government under my leadership, there will be no increase in income tax for medium-sized companies in Germany." Saarland's Minister-President and Deputy SPD Chairwoman Anke Rehlinger told "Bild am Sonntag": "We shouldn't impose any kind of mental restraints on ourselves from the outset." What the SPD is considering is "for the very wealthy people in this country." "In the coalition agreement, we made a clear statement to ease the burden on small and medium incomes. This also includes corporate tax reform for economic stimulus. But I think it's a good idea to zoom in a bit." Rehlinger is also referring to inheritance tax. "We can take another look at inheritance tax." It offers a great deal of flexibility, which often "leads to a very low tax burden."

Starting in September, a new commission will develop reform proposals for social benefits such as citizen's allowance, housing benefit, and child supplement. Federal Minister Bärbel Bas (SPD) established a Social State Commission for this purpose. According to the coalition agreement, the body is to present its findings by the end of 2025. The background to this is the expected further sharp rise in social security costs in the coming years. Business associations have long complained that this will make labor more expensive. Economics Minister Katherina Reiche (CDU) also sparked a debate about extending working lives.

Merz reiterated the need for a reorientation of social policy. "I will not allow myself to be irritated by words like social cuts and clear-cutting, and all the other things that come with them," he said. "The welfare state as we have it today is no longer financially viable with what we are doing economically." He deliberately made it difficult for the Social Democrats, Merz said. "But the appeal is directed at all of us: Let us show together that change is possible, that reforms are possible." With an eye to the budget gap, Klingbeil also called for structural reforms in health care, long-term care, citizen's income, and pensions: "I expect more imagination from all those responsible than simply cutting benefits for workers."

CDU General Secretary Linnemann told the Neue Osnabrücker Zeitung : "Reforms have rarely been so urgent. The last time we had a moment like this was 20 years ago." Before Agenda 2010, there were over five million unemployed. "Today, the challenges are different, but the country, just like back then, has its back against the wall because the welfare state has become unaffordable." In "Agenda 2010," then-Chancellor Gerhard Schröder (SPD) implemented far-reaching reforms in labor market and social policy. Linnemann said: "We have to be honest with ourselves: We can't afford everything the same way in the future."