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Finance Minister Scholz foresees a new debt of 96.2 billion euros by 2021. For the budget that the cabinet intends to decide on Wednesday, a new exemption from the debt brake is necessary.
By Tom Schneider, ARD capital studio
The time of “black zeros”, that is, of balanced budgets, seems to be only a faint memory. Due to the effects of the corona pandemic, the 2021 budget also says: It will not work without a large amount of new debt.
According to government sources, it will be 96.2 billion euros. That’s more than Olaf Scholz would have liked, and even a lot more than he really should be allowed under the debt brake rules. Only 10 billion euros of new debts would be possible on credit according to the rule stipulated in the Basic Law for public financing in 2021. For the budget, the Bundestag must grant another special permission.
Ministry of Finance: “Responsible budget policy”
However, the Treasury speaks of a responsible budgetary policy. You resolutely come out of the crisis with the different economic measures. After the record level of 509 billion euros this year, public spending next year will be 413 billion, which is still significantly higher than before the corona pandemic.
After all, despite the new debt, Germany has the lowest debt ratio of the major industrialized countries in the G7. It is worthwhile that, thanks to balanced budgets, Germany reduced the quota below 60 percent before the crisis, as required by the common euro zone debt rules.
Tax revenue is shrinking
Despite the significantly changed state of public finances, the red pencil does not apply anywhere. On the contrary, the government points to the strong growth in investments due to Corona: after a good 71 billion euros this year, it should still be 55 billion next year. And in the following years, at 48 billion, the amount will be significantly higher than before the crisis.
However, there are concerns to be heard from Scholz Secretary of State Werner Gatzer’s always rather optimistic budget department: the ministry is talking about massive tax cuts, which, along with significantly higher spending, signify an entirely different budget trend. . Federal spending is likely to be € 50 to € 60 billion higher than before Corona. At the same time, tax revenues have been reduced by almost the same amount. The result is a hole in budget planning that can be filled with new debt this year and next. But the government has the debt brake on its neck.
Hope for a post-crown economic miracle
Only three remedies would really help against this trend, but they all face very different taboos. “Raising taxes” is a means, at least for the rich. From the Left Party to the SPD, the idea finds favor. But with the Union, which also sets the standard in the grand coalition, it cannot be done.
Another means is the so-called “spending cut”, especially in social budgets, which some perceive as excessive. But the SPD would be blocked here, especially in the 2021 election year. Meanwhile, the third exit is already listed in the budget planning: Economic miracle of the Crown, but if this will come and with what force it is completely open.
In general, expenses are spread over several departments. In addition to subsidies for the social budget and health and pension insurance, a lot of money is flowing into economic stimulus packages to deal with the crown. The government’s climate policy is also having an impact, as is aid for federal states and municipalities, as well as increased contributions to the European Union.
Topics for the next federal government
However, there are likely to be interesting debates in Parliament. Especially on a point in the budget, which in German means “need for financial policy action.” Behind this are budget items, of which it is not yet known with certainty how much they will really be in the future. In the budget, they are recorded as so-called lower than global expenses or global additional income. Behind this is money that a government generally has yet to generate, for example, through savings, restructuring, tax increases. Or by the fact that a sudden economic growth is rushing to the rescue, causing an unexpected increase in tax revenue.
Ironically, these are election-year processes that a future federal government must first shape and possibly pay for. On this unclear basis, the Ministry of Finance promises that the debt brake rules will be enforced again from 2022. These are all topics for the next Minister of Finance. Like the plan to reduce the new debt: from 2026 to 2042, according to the plan of the Ministry of Finance, most of the debt will be repaid again.
