Another long meeting, a few more controversial items, one last struggle, and then it is there, the federal budget for 2024. Finally. Hopefully. Not that anything goes wrong in the end…
Thursday’s budget adjustment session in the Bundestag is something like the Champions League final for parliamentarians. It doesn’t get any nicer. The representatives decide what the state does with its citizens’ money. The members of the Budget Committee are therefore often called the “little kings” of Parliament.
Last year, however, they were pretty much forgotten kings. The ministers of the traffic light coalition argued publicly about their budgets. It took a long time for a draft to even reach the Bundestag. The 2024 budget was fought over to the point of inability to govern.
It was clear from the start that it would be difficult. The fact that the SPD, Greens and FDP would make life extra difficult for each other is their own fault. What began as a strange pen pal relationship developed into a tiring “as you are to me, so I to you”. Looking back on an odyssey – full of trials and tribulations that have almost been forgotten.
On February 14th, a letter was received by the Federal Ministry of Finance. “Dear colleague,” writes Robert Habeck to Christian Lindner. The Green Vice Chancellor explains why he cannot accept the Finance Minister’s budget proposals. On behalf of all ministries led by the Greens, Habeck is calling for tax increases in order to be able to finance agreed projects despite limited budgets. He does not question the debt brake.
It is a remarkable letter, in its poignancy, in its existence, and in general.
The budget situation at this point looks like this: Lindner is planning expenditure of 424 billion euros for 2024. He does take out new loans, but only within the framework of the debt brake. That’s what he promised his voters and he wants to stick to it. Because interest rates have risen, Lindner now has to close a gap of 12 billion euros. That’s why he called on all ministries to save money.
Lindner answers Habeck, alluding to the debt brake: “I was relieved to see that the ministries led by the Greens are not questioning the Basic Law for the Federal Republic of Germany.” The finance minister defends his key figures, i.e. the more broadly drafted budget, which will then be used to develop the budget law down to the details of each department.
The exchange of letters between the Vice-Chancellor and the Vice-Vice-Chancellor was received with amusement and even horror in political Berlin. Lindner is visibly pleased that he managed to respond with such a mocking response. Habeck seems duped. This sets the tone for the next few months.
These weeks in March, says Christian Lindner, are the most beautiful in a finance minister’s annual calendar. Finally budget negotiations. Lindner welcomes, his colleagues come. One after the other, first Social Minister Hubertus Heil, who has to defend the largest chunk, then the other ministers. Everyone has to come forward and fight for their department. Maybe someone even has to dance twice. After all, it’s a lot of money.
The additional expenditure reported by all ministries adds up to 70 billion euros. Yes, you read that right. Lindner wants to close the 12 billion gap quickly, the rest of the cabinet still has wishes. One colleague in particular is unimpressed by the finance minister’s pressure: Lisa Paus, a left-wing Green Party politician who has been Federal Minister for Family Affairs for ten months. She would like to introduce basic child welfare as quickly as possible. A matter close to the heart of the Greens, which the traffic light agreed upon in the coalition agreement.
For Paus, basic child welfare is the most important social policy project of this government. For the FDP, this is about streamlining and digitalizing administrative processes. Paus is planning to spend twelve billion euros. At the FDP they are wondering whether the minister has copied the trade union federation and rounded it off a bit. The DGB is demanding 12.5 billion. The Ministry of Finance, on the other hand, assumes two to three.
Actually everything should be clear by March 15th. Then Linder wants to present the key figures to the cabinet. But there is still no agreement. The key values are postponed. He will “only go into the cabinet when I have a realistic draft budget,” says Lindner. The situation cannot be compared to any budget consultation in the past ten years. “For the first time in over ten years we have to consolidate.”
The Greens are now hoping that the situation will be defused with the next tax estimate. That means there will be more money available.
Time is running out. The ministers’ wishes are still too expensive. And Lindner’s gap now amounts to 16 to 18 billion euros. Family Minister Paus remains particularly stubborn. In order to get more children out of poverty, “basic child welfare needs to be adequately financed,” she demands. The twelve billion euros per year she is calling for is “more of a lower limit for this.”
The finance minister is now making a decision that is intended to signal that what little budget he has is not slipping out of his hands: he is waiving the key figures. This is unusual, but by no means unacceptable. The benchmarks have been the government’s usual practice since 2012 as an interim step. They are not an obligation.
The finance minister now has more than two months to get his cabinet colleagues to save. The finished budget draft is to be approved by the cabinet on June 21st and forwarded to the Bundestag. This is the schedule in the monthly report of the Federal Ministry of Finance, which Lindner’s house publishes at the end of April.
Another dispute is overshadowing the budget debate these weeks. Germany is discussing “Habeck’s heating hammer” – and the traffic light is becoming more and more defensive.
Lindner is on his way to Japan for the meeting of the G7 finance ministers. On the government plane he gives one of those background conversations that you’re not allowed to quote from. He talks about the difficult budget negotiations and at the end he releases a sentence that seems completely harmless without context: “June 21st no longer applies.” This is the day on which the budget should be agreed between the SPD, the Greens and the FDP. And now, at the beginning of May, the deadline can no longer be met.
In Berlin, SPD budget politician Dennis Rohde reacted that the announcement came as a “surprise.” Lindner, on the other hand, is selling the postponement as non-news, as something that has been foreseeable for weeks, not a big deal, known to virtually everyone. The “old date” is obviously still in some people’s minds and in circulation, says Lindner. That the old date is also in the latest monthly report from the Ministry of Finance? Gifted.
In Niigata, on the Japanese west coast, an act of German thoroughness took place a few hours after landing. Lindner presents the tax estimate. The message of the numbers can be summarized briefly: The money is out. On average, the state will have 30 billion euros less at its disposal in the next few years than was assumed in October. By 2027, the federal, state and local governments will be short of almost 150 billion euros. The Greens’ hope that the estimate could solve the dispute on its own is not confirmed. On the contrary. Things continue happily. The financing gap is now 20 billion euros.
Lindner is again holding talks with all ministers. But he’s not making any progress. A number of cabinet colleagues cannot or do not want to come to an agreement with him. That’s why the Chancellor should take care of it now. Of course, this seems stupid to the outside world. Lindner stands there like someone who runs to dad during an argument between siblings and asks for a word of authority.
Ironically, two FDP ministries – education and transport – are expected to make by far the largest savings contributions. According to the calculations, this will help the FDP leader and Finance Minister Lindner to break down the resistance of the other departments. Only one department remains exempt from all the efforts. Defense Minister Boris Pistorius doesn’t have to worry about his budget.
You can imagine the Bundestag in the last week of session before the summer break a bit like the tennis tournament in Wimbledon, which had just started at the same time. There are main locations where the stars can be seen. And secondary fields that are not so much in focus. The heating law continues to play a role on Center Court, no question about it. But right next to it, on the no. 1 Court, the second largest place, the Greens and the FDP are engaged in an exciting budget duel: first about basic child welfare, now also about parental allowance.
FDP surcharge: Finance Minister Christian Lindner is demanding a savings contribution from (almost) all ministries for the 2024 budget.
Surcharge Greens: Family Minister Lisa Paus then decides to lower the income limit for parental allowance. In the future, only couples who have less than 150,000 euros to pay tax should receive it.
Serve FDP: You can’t do that!
Serve Greens: You wanted to save!
FDP surcharge: But not for parental allowance! You can’t deal with the top performers in this society like that.
Surcharge Greens: Here is a letter that proves that Lindner’s Ministry of Finance asked us to do exactly that: save on parental allowance, please!
Serve FDP: The Liberals have also unearthed a letter. It should prove: Nene, dear Greens, the finance minister never insisted that the family minister had to save on parental allowance, of all things.
The issue is headed to the Center Court. And on Wednesday, July 5th, the time has actually come: the cabinet approves the draft budget for 2024. On the same day, the Federal Constitutional Court stops a hasty adoption of the heating law. Perhaps one could have guessed that this would not be the last objection for the traffic light from Karlsruhe. Perhaps.
The Ampel Lake rests quietly. Work on the budget continues in the background, but the CDU is providing the holiday entertainment. Friedrich Merz replaces his general secretary. Hendrik Wüst and Boris Rhein walk through Merz’s constituency and announce their right to have a say in the candidacy for chancellor. The traffic light budget dispute is briefly forgotten.
The SPD, Greens and FDP really messed up their own “restart” after the summer break. And it happened like this: Even a finance minister has his favorite projects. Lindner’s is called the “Growth Opportunities Act”. The FDP leader would like to relieve the burden on the German economy by six billion euros. It is not known whether Family Minister Paus thinks this is a good idea in principle. But because she insists on the billions for basic child welfare, she is now doing what her party always accuses the liberals of: she is blocking. The FDP reacts accordingly emotionally and reproachfully.
The old traffic light team spirit remains unchanged: As you do for me, I do for you!
It is all the more pleasant that the budget is now finally proceeding as usual in the Bundestag. First reading immediately after the summer break, then discussion in the committees. The chief housekeepers of the SPD, Greens and FDP get along well with each other, yes, you could even say: they value each other very much. Finally routine and a little bit of confidence.
The Bundestag is diligently deliberating. No further household incidents.
Mid-November is budget week. The appointment is set and it doesn’t wobble. The MPs work on time. But then the constitutional judges from Karlsruhe get in touch one day before the adjustment meeting, the Champions League final. The Union had sued there against the second supplementary budget for 2021. The court now says: The Union is right.
The consequences of the judgment gradually become clear. Lindner imposes a budget freeze on the current budget. And the budget for 2024 also needs to be revised again. Because the court has declared the practice of filling special pots for several years in emergency situations to be unconstitutional, the high double-digit billions that the traffic light had planned to spend are missing for the coming years.
For the 2024 budget, the gap is 17 billion euros. It must now be closed quickly. The budget committee meets for a settlement meeting, but the MPs don’t decide anything. This is particularly disappointing for those capital city journalists who had previously researched the deliberations – and were prepared to reconstruct the long night of the “little kings” in detail.
The SPD wants quick decisions and a simple solution. According to the message from the Chancellery, the budget must be in place before Christmas. According to the message from parliamentary group leader Rolf Mützenich, the debt brake must be suspended again in 2024.
But Lindner doesn’t allow himself to be stressed. If there is no budget approved by the Bundestag on January 1st, the provisional budget management will apply, as it does after federal elections when a new government has just been formed. In this situation, the Finance Minister decides in case of doubt. And an exception to the debt brake? Not possible with Lindner. No chance.
It quickly becomes clear that there will only be a political agreement before Christmas, not a finished law. On December 13th, Scholz, Habeck and Lindner appear in front of the press. The good news of Advent: Yes, we have a new budget draft. Scholz says that the debt brake will probably have to be suspended again to a limited extent in order to make aid payments to those affected by the Ahrtal flood. The Chancellor now calls suspending the debt brake an “exceeding decision”. Lindner must be understood as if it had not yet been decided. And Habeck just seems happy that the stress is over. The farmers, among others, are being cut – which quickly turns out to be a mistake.
The farmers protest loudly. But calm has now returned to the household. This is the conclusion that can be drawn after almost a year of traffic light disputes over money: once it is the parliamentarians’ turn, there will finally be peace. Sure, then the most difficult hurdles have been overcome – but not all of them. Does an exception to the debt brake have to be decided again for the Ahrtal aid? The agreement that this was not necessary only came shortly before the cleanup meeting began. And she came pretty quietly.
Once the householders have done their work, the Bundestag still has to approve the budget. That should happen on February 1st. Preparations for the 2025 budget have long been underway in the Ministry of Finance. Will there be key figures this year? Or a mocking exchange of letters between cabinet colleagues?
