🇩🇪 A German budgetary pirouette - and how it may harm democracy

In Germany, fiscal policy may contain elements of a dance figure called the pirouette: In the new federal budget, the promise given in the coalition treaty to cut energy taxes for private consumers has been wiped off. According to Federal Finance Minister Lars Klingbeil, who also co-chairs the Social Democratic Party, the five billion Euros needed per year for this tax break are simply not there. The full truth? The sum, rather than being granted to energy consumers, will be spent on increasing pensions for mothers who gave birth to children before the year 1992. This pet project of the Christian Social Union, Klingbeil’s and Chancellor Merz’ partner from Bavaria, is being framed as “an act of social justice” awarded to millions of women who so far have been left out of this particular benefit of the German welfare state. Meanwhile, energy costs will remain ontouched in the country which already suffers from the highest electricity prices in the EU.

In an ageing society, for political parties, not delivering on pensions comes close to electoral suicide. Imagine an MP returning from the “Berlin bubble” to his rural constituency and having to admit that the time of painful cuts into the welfare net has begun – impossible. With both eyes on the next election, he or she would always prioritise maintaining a high level of social security over granting other types of benefits. Ever since Chancellor Konrad Adenauer, back in 1957, forced his fellow Christian (and Christian Social) Democrats) to pass a bill according to which “pensions follow salaries” (he secured an absolute majority of seats in parliament a few months later), the German welfare state can be regarded as sacrosanct. When one of Adenauer’s successors, Social Democratic Chancellor Gerhard Schroeder, courageously undertook a far-reaching reform of labour markets and unemployment security in 2003, history allowed him to stay in office for only one-and-a-half more years. “Voters know no mercy”, the take-away for Klingbeil, Merz & Co seems to go.

The pro-mothers’ pension turn looks a little short-sighted, though. The right-wing Alternative for Germany (AfD) is only waiting for political mishaps like this. “Look”, they will finger-point, “this government spends billions of Euros on useless projects, such as the energy turn-around or supporting Ukraine. But when it comes to offering a relief for energy consumers, they duck away.” This is what the political center obviously still has not understood: As long as you do not pay serious attention to the real problems, such as exploding costs of living, voters will continue to vote for the extremes. In current polls, the AfD comfortably hovers above 20 percent while the Social Democrats have crashed down to 13 (!) percent. In some of the states in Eastern Germany, such as Thuringia and Saxony-Anhalt (where regional elections will be held in 2026), AfD candidates are lurking at the gates of the State Premiers’ residences. Will the parties in the “democratic middle” finally wake up? Or will they end up as sleep-walkers? The most recent book about the black-red coalition is titled “The last chance: Chancellor Merz and the fight for democracy”. Let us hope that the last chance will not become - the last dance..

This analysis was contributed by Hans Bellstedt, founder of Hans Bellstedt Public Affairs GmbH, Berlin.

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