Federal budget | "I say: Have a good trip, SPD!"

This week, the Bundestag begins deliberations on the budget for 2025…

Finally.

Why? Could things have happened more quickly after the federal election and the formation of a government?

Yes, of course, we've lost weeks because of the Federal Finance Minister's procrastination. The federal budget could have actually been passed this week. But now the first reading will take place in July, and the budget won't be passed until September.

With what consequences?

That for nine months of the year we only have provisional budget management. It's comparable to a budget freeze. This means that only statutory benefits are funded. New, urgently needed additional investments cannot be initiated, and voluntary benefits to associations, clubs, and third parties that are tied to an approved budget are subject to budgetary proviso or are all on hold. This is another way to cut spending.

Do you think there is some calculation behind this?

A provisional budget, especially one that lasts for nine months, is every finance minister's dream. This would allow for significant savings. But it also prevents urgently needed investments from being put on track. The real obstacle to growth and investment is therefore Lars Klingbeil.

If we look at the gigantic military spending in the coming years – are we moving towards a military budget and a war economy?

At least in the direction of war readiness, that is the stated intention. The current budget already amounts to 96 billion euros. Far more than 200 billion euros are to be invested annually in armaments , with additional funds in converting infrastructure for military use. That is completely unrealistic and insane.

What does unrealistic mean?

If this is to be financed, other investments and social benefits will have to be cut on a large scale. The debt brake has been lifted for armaments, but EU standards only allow for a limited amount of debt. This will have devastating social consequences. You can already see this in the coalition's decision on the electricity tax . It was supposed to be reduced for everyone, but now it only applies to large-scale industry. Small businesses and private individuals are left empty-handed. And the justification is: the federal government's money is not enough. The so-called Social Democrat Klingbeil apparently no longer even considers a social facade necessary.

Now there is not only huge spending on armaments, but also a major investment program for infrastructure.

The budget is supposed to allocate 115 billion euros this year. But that's just a policy announcement. While it's a significant increase over previous budgets, I doubt it can even be implemented properly this year.

Why?

Because it doesn't happen that quickly, because there isn't sufficient planning lead time at the federal level. Neither in the area of ​​Deutsche Bahn nor for road construction. The situation is different for the states and municipalities, which actually account for 70 percent of investments in Germany. They often have completed projects in their drawers. Therefore, it would have made more sense to give a much larger share than 100 billion euros of the 500 billion euros of loan-financed funds from the special fund to the states and municipalities.

100 billion is no small amount.

Stretched over eleven years, that's €9.1 billion per year, distributed among the 16 federal states, depending on their size. This puts the figure into perspective. At the same time, the federal government is ripping money out of the states' pockets with its corporate tax reform. This will result in over €60 billion less tax revenue for the years 2030 to 2032, and more than half of this will have to be borne by the states and municipalities. This means that the federal government is playing a game between the left and right pockets. This is a naive calculation that won't work.

Isn't there an agreement between the federal and state governments that municipalities should be compensated for the lost revenue?

You have to look closely at this. The corporate tax system has two stages. The so-called investment booster with higher tax depreciation for companies. This will mean that municipalities will receive around €13.5 billion less in income and trade tax by 2029, and this will be offset . But in the second stage, corporate tax for companies will be gradually reduced, and when the law takes full effect in 2032, we're talking about annual revenue shortfalls of around €25 billion. That means they're putting a few investment gifts on display now, but ultimately there won't be any increased investment. I can guarantee that.

Is this also the price of dramatically increasing military spending?

Yes, we're arming ourselves to death, but on the other hand, we're causing the lights to go out in many municipalities, so to speak. Many municipalities are in the midst of budget consolidation—or, more accurately, in dire straits! In addition, they're burdened by legacy debts that they can barely service, both in East and West Germany.

Aren't investments also being made in completely wrong things? In addition to the massive military buildup, for example, the new gas-fired power plants planned by Economics Minister Reiche.

This is completely over-engineered and is supposed to be financed through a levy on consumers. Furthermore, it's a disgrace that most of these power plants are supposed to be built south of the Weißwurst equator and not where the energy regions are, for example, in Lusatia.

The states were supposed to use the billions in investment funds only for additional projects that weren't already planned. This was reversed. Isn't that good for the states because they now have a free hand?

This shows the reality. The states and municipalities are financially in dire straits. In this respect, I understand the states' initiative, which the federal government is now adopting. Nevertheless, this agreement violates the resolution on the special fund. It's not sustainable! That's why it would have been better to fundamentally reform the debt brake. In other words, to abolish it.

In the budget debate, the CDU and CSU are creating the impression that they could release a lot of money by cutting the citizen's income. Given the subsistence level, what is realistic?

Just peanuts. The citizen's income debate is being used to stir up sentiment , to steer the debate about wealth and assets in this country in a different direction. And it's not just the CDU/CSU that's conspicuous in this. It's true that 72 percent of the relief from Social Democrat Lars Klingbeil's corporate tax reform will end up in the richest one percent of the population. The renowned German Institute for Economic Research recently calculated this in a statement. Just imagine. I find it outrageous that the first action of an SPD finance minister was a corporate tax cut. During the election campaign, they still talked about respect and justice. This won't lead to a resurrection of social democracy. All I can say is: have a good trip!