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Viel helps a lot. That was the motto of the federal government in the last months of the crisis. Finance Minister Olaf Scholz (SPD) had the Bundestag approve ever-higher debts. After two supplementary budgets, it was allowed to obtain additional loans of € 218 billion this year.
The money went to huge aid and stimulus packages, with which it should mainly support companies, employees and the health sector. In addition, it had to be taken into account that tax revenues collapse with the economy.
Almost two and a half months before the end of the year, it appears that dealing with the crisis will cost far less money than Scholz estimated. This is indicated by figures from his own ministry.
The effects of the reduction of new loans will last until 2042
Consequently, in the first nine months of the year, federal spending exceeded revenue by just € 72.5 billion. That means: In the last quarter of 2020, twice as much money would have to be spent on crisis management than before, to reach 218 billion euros.
Initial estimates of the real level of new debt in 2020 are well below € 218 billion: “If you take into account tax revenue, previous exit and 14 years of family experience, it is certainly not bad with a new one. debt of around 150 billion euros at the end of the year, “says Otto Fricke, budget spokesman for the FDP in the Bundestag. Fricke is not alone in this estimate among domestic experts.
Even if there were 150 billion euros in the end, a new record would still be reached. During the financial crisis of 2009 and 2010, the federal government made a total of 78 billion euros in new debt. But it would be much less than initially estimated, which would ultimately have an impact until 2042.
Because this would also change the cornerstones of the 20-year payment plan, as envisaged by the debt brake. The annual rate of six billion euros would decrease, which would at least give more room for maneuver to future finance ministers and generations.
The year, of course, is not over yet, the Corona crisis has returned. Dennis Rohde, SPD’s chief housekeeper, also notes that the € 72.5 billion is “just a snapshot.” The required net debt at the end of the year cannot yet be calculated.
The second corona wave could significantly change the outcome.
If the deficit turns out to be lower than expected in July, when the second supplementary budget was finalized, he, as a budget politician, would of course be satisfied. But that’s not the point these days.
“It is now important to continue implementing the various measures of the crisis and the economic stimulus package at full speed to combat the health and economic consequences of this crisis,” said Rohde.
This sounds similar to Eckhardt Rehberg (CDU), the head of the Union’s parliamentary group. “We don’t know how the second crown wave will affect the economy and tax revenues,” he says.
From the numbers up to September the full year could not be inferred. Especially since the end of the year, among other things, the endowments to the energy and climate fund amounting to 26,500 million euros, the second tranche of the child allowance and the VAT reduction decisions for the fourth quarter still do not appear in the figures until the end of September.
In the first nine months, federal tax revenue fell 12.7 percent compared to the first nine months of the previous year. For the year as a whole, the tax estimates are far from 16.3 percent less compared to the previous year. They will meet again in early November to review the forecast.
Structural problems prevent billions from being used
There is a lot of psychology involved in budgeting in times of crisis. At the beginning of the crisis, politicians did not want to leave doubts about whether the money would be enough in the end.
The government has done well so far, as opposition representative Fricke points out. “The government has proceeded in accordance with the motto: We advertise as much as possible to show the market and everyone else that Germany is serious,” he says. Even then, the ministries involved knew that certain parts were unlikely to flow.
However, it is questionable whether a large chunk of the billions of aid has yet to be used or if it was simply too difficult to apply. Sven-Christian Kindler, Greens budget politician, sees structural problems in federal government programs, so they can hardly be used despite great difficulties.
“Emergency aid is characterized by a lot of bureaucracy, and for those who need it urgently, such as the event industry and the freelancers, it ignores reality,” he says.
Of the 25,000 million euros earmarked for bridging aid for companies, so far slightly more than 1,000 million euros have been requested. The federal government urgently needs to improve this.
What is needed is financial support for the self-employed with living costs and specific support for the cultural and events sector.
A transfer of credit authorizations after 2021 is not easily possible
Finance Minister Scholz and Federal Finance Minister Peter Altmaier (CDU) have already announced programs of this type, which are specifically tailored to a target group, but whether and when they will arrive is still open. There is no doubt that there is still room for maneuver in the budget.
However, the possibilities of using the € 218 billion credit authorizations for completely new projects are limited. Finally, expenditures are clearly allocated in the individual plans of the 2020 federal budget.
Carrying it over to next year isn’t that easy either. “Unused credit authorizations expire at the end of the year,” says Rohde, SPD’s housekeeper. This is expressly regulated in the Budget Law.
Now it will be exciting to see to what extent lower emerging spending in 2020 will affect the budget for next year. In 2021, Scholz wants to incur new debts of 96,000 million euros and to suspend the debt brake again.
FDP considers that the 2020 budget is “unnecessarily inflated”
Eckhardt Rehberg of the CDU / CSU parliamentary group says the federal government draft is available for deliberations on the 2021 budget. The next fiscal estimate and current developments in the crown pandemic would be included in the final budget, which will be it will negotiate in the budget committee of the Bundestag and will be decided by parliament.
Rehberg wants to avoid at least an increase in net borrowing. “At best, we can reduce the new debt,” he says.
The criticism comes from the FDP. “The grand coalition has unnecessarily inflated the 2020 budget, now there is spending and new debt that is not needed in quantity, at the expense of transparency and parliamentary scrutiny,” says Fricke.
Looking ahead to 2021, your party will analyze exactly what is really needed for efficient crisis management and what additional expenses are necessary and reasonable in these times.
It couldn’t just be a matter of putting money in the window for everything and everyone for the next year as well. Investments could be counted among the current budget expense items that belong to this item. This year’s “investment spending” should amount to a good 71 billion euros.
According to the monthly report of the Federal Ministry of Finance, at the end of September only 25,000 million euros were lost. It is difficult to imagine that the rest of the amount will be claimed until the end of December.
