Better to Get Into More Debt. For years, the black zero was the mantra of German financial policy. No name stands for it like that of the former Federal Minister of Finance Wolfgang Schäuble. As a debt brake, the black zero – in a modified form – even found its way into the Basic Law.
That was just ten years ago, and since then tax revenues have been bubbling lush. But the time of overflowing cash registers is irrevocably coming to an end. The economy has weakened significantly, and even a real recession can no longer be ruled out. At the same time, climate protection demands new efforts from the state, which will also cost a lot of money. In this situation, some people are now pleading for a move away from the black zero – for example, IW boss Hüther.
Demands from the SPD
The debt brake is not flexible enough to cope with all the necessary investments in infrastructure, climate protection and municipal equipment, said Hüther. New debts to expand government investments are therefore no longer taboo for the IW chief. The time is rarely favourable for this. Because thanks to negative interest rates, the Federal Finance Minister now earns on every euro he borrows – a wrong world. The yield on ten-year Bunds is currently even below the ECB deposit rate.
Hüther is not alone in his view. Above all, there are currently more voices coming from the SPD who would like to soften the black zero. Karl Lauterbach and Michael Roth – two candidates for the SPD chairmanship – have expressed themselves accordingly. You receive opposition from the Union, but also from your own ranks. SPD budget expert Johannes Kahrs sees no need for new debts. In the Energy and Climate Fund, a lot of money has already been set aside for possible climate protection measures. Despite this help, the pressure on Federal Finance Minister Scholz is likely to increase to be more open about new debts.
The debt brake already provides for exceptions
The moment of truth will come in autumn when the federal government wants to take its climate decisions. Incidentally, the debt brake is not as inflexible as some think. The black zero only applies to so-called structural budget deficits; the federal government may even deviate from this by up to 0.35% of GDP.
Further exceptions apply to the financing of economic stimulus measures, in the event of extraordinary events (for example in the event of a new financial crisis) and natural disasters. That should open up sufficient room for manoeuvre in terms of budgetary policy.
Better to Get Into More Debt. For years