Uncomfortable budget negotiations: Lindner agrees to traffic light cuts

Uncomfortable budget negotiations
Lindner agrees traffic lights on cuts

4/8/2023 7:26 am

The traffic light coalition partners still have a little more than two months to negotiate the 2024 budget. From the point of view of Finance Minister Lindner, this will be a tough struggle: he expects a billion-dollar deficit for the coming year, which is why every single issue should be discussed.

In view of the large gaps in the next federal budget, Finance Minister Christian Lindner agrees that the traffic light coalition will make cuts and uncomfortable decisions. “Politicians have to learn again to get by with the money that the citizens generate,” said the FDP leader of the “Rheinische Post”. Each individual expense will now be discussed “on the basis of its justification and its amount”. “Some cherished habits will also have to be put to the test.”

Lindner said it was important to him that the measures were distributed fairly. “It’s not possible, for example, for commuters and drivers to be burdened unilaterally. What also doesn’t work are tax increases. Because we’re now a country with the highest taxes. And any tricks to incur more debt are out of the question anyway.” It is important to curb spending growth, he said. “The national budget cannot grow faster than the economy.”

The government draft for the 2024 budget is to be approved by the cabinet on June 21 after the tax estimate for May. After that, it’s the turn of the Bundestag, which wants to decide on the budget at the beginning of December. Lindner outlined the dimension of the gap: “As of now, we will have a deficit of 14 to 18 billion euros in the coming year with revenues of 424 billion euros. This budget gap must be generated by doing without.” If you then want to set additional spending priorities, for example in defense or education, then you have to cut even more elsewhere. Tariff increases in the public sector should also be taken into account.

Only limited subsidy for heating replacement

Lindner told the newspaper that the imbalance had nothing to do with the crises of the past few years. “In truth, Union-led federal governments have continually introduced new social benefits and subsidies for a decade that were not sustainably funded. The unnaturally low interest rates have masked that.” Now the interest rate level has normalized, instead of four billion euros in interest as in 2021, according to him, it will be 40 billion euros this year.

The Minister of Finance also gave the federal states little hope of additional federal funds for refugee care. The federal government already supports the states massively. The federal government pays the living expenses for the refugees from Ukraine, although the states are actually responsible. In addition, the federal states would have achieved a surplus in 2022, while the federal government had to take on high debt due to the crises. In addition, the federal government is facing enormous challenges with the Bundeswehr, support for Ukraine, the stabilization of social security, the restructuring of the energy supply and the modernization of the infrastructure.

The state will also only be able to cover the costs for a heating replacement to a limited extent through grants. The federal government wants to speed things up and avoid social hardship. “However, it must be said clearly that the state cannot bear the costs in the long term and not completely.” Limited resources must therefore be used as effectively as possible. No one will be left in the lurch who needs support.

But the state has no money of its own. “In the end, it’s always the taxpayers who have to pay for the subsidies.” He thinks a subsidy based on the heating system to be replaced makes sense. “This would give the highest subsidy to the heating system with the highest CO2 emissions. That would be particularly effective, because it would give us a particularly large amount of climate protection per euro.” In addition, low-income households often have older heating systems. “There is a social aspect here.”