Federal Justice Minister Marco Buschmann has once again rejected reform of the debt brake. “The debt brake has proven itself to be an effective instrument and that is why we should keep it,” said the FDP politician to the editorial network Germany (RND). “Many who talk about adjusting the debt brake for the future actually want to return to the legal situation of the past.”
It was the Federal Constitutional Court that determined in 2007 that the old law had not proven effective. According to the old regulation, the state was allowed to take on about as much debt as it made investments. “That led to endless borrowing,” said Buschmann. “In the current economic situation, it would be downright absurd to return to this rejected practice. We need more budgetary discipline instead of new ways to generate more debt.”
Calls for reform
Leading economic research institutes recently recommended a “cautious” reform of the debt brake in order to give the state more leeway. There are also calls from the SPD and the Greens to modify the regulation in order to enable investments. “The debt brake in its current form does not meet the current and future investment needs in our country,” said SPD parliamentary group deputy Achim Post to the Düsseldorf “Rheinische Post”. The fact that the leading economic institutes are now also in favor of a reform underlines the need for action.
Green party deputy Andreas Audretsch once again promoted the idea of a loan-financed Germany investment fund that could be set up jointly by the federal and state governments. “We have to invest massively, this can only be achieved with a targeted reform of the debt brake,” he told the “Rheinische Post”. Such an investment fund is also an offer to the states and municipalities to jointly resolve the massive investment backlog in Germany.
Buschmann: Budget investments at record levels
Buschmann, on the other hand, emphasized: “Investments in the budget are at record levels. The problem is not the investment funds. The problem is that they flow out far too slowly because planning and approval take so long.” Incidentally, nine out of ten euros invested come not from the state, but from the private sector. If you want more investment, you should increase the incentives here.
The debt brake was anchored in the Basic Law in 2009 after the global financial crisis. Accordingly, the federal and state governments are no longer allowed to offset their budget deficits by taking out loans. While there is an absolute ban on indebtedness for the states, the federal government has a small amount of leeway. He is permitted net borrowing of a maximum of 0.35 percent of gross domestic product.
Union calls for complete overhaul of the budget
In the debate about the debt brake, the Union is initially calling for a complete overhaul of the federal budget. “Before thinking about changing the debt brake, the entire budget must be re-prioritised,” said the budget spokesman for the Union parliamentary group, Christian Haase (CDU), to the “Rheinische Post”. But the government is still not ready for this. The austerity appeals from Federal Finance Minister Christian Lindner (FDP) had already faded away before they reached the ministries.
Budget discussions for 2025 are currently underway in the federal government. Financial leeway is tight: there is already a gap in the double-digit billions that needs to be closed.
