“Before the members of the Bundestag disappear into the summer holidays at the end of the week, they still have busy days – and days that will be expensive for the state. We are talking about huge sums of money. After 156 billion euros for Corona aid in March, Federal Finance Minister Olaf Scholz (SPD) is once again calling for a 62.5 billion euro budget for the stimulus package.
This would increase the federal government’s net borrowing to EUR 218.5 billion this year. By way of comparison, during the financial crisis, the federal government made a total of 78 billion euros in new debt in 2009 and 2010 – and at that time the debt brake enshrined in the Basic Law did not yet exist.
On Thursday, MPs are due to repeal the brakes introduced in 2011 for the second time in a few months. This possibility is expressly provided for in Article 115 of the Basic Law “in the event of natural disasters or exceptional emergencies”.
The prerequisite is that a majority votes in favour, i.e. 355 of the 709 members of the Bundestag. This is actually considered a formality, since the governing parties CDU, CSU and SPD alone have 398 deputies. There have been few objections from the opposition either.
But now, a few days before the vote, some Members could be thinking again. The Federal Audit Office is highly critical of the debt plans.
The independent guardians of the federal government’s revenue and expenditure, who are based in Bonn, doubt that the new supplementary budget is indeed necessary. They even have constitutional concerns.
“The implementation of the economic and crisis management package may in part be suitable to promote the macroeconomic recovery,” reads a written statement on the hearing in the Bundestag’s Budget Committee on Monday. But some things look oversized.
“Whether a NKA bloated to EUR 218.5 billion (net borrowing; d. Red.) compatible with the constitutional debt rule is questionable.” Especially since the second draft amendment undermines essential constitutional principles such as annuality, maturity, truth and clarity.
These are words that no Federal Finance Minister likes to hear. Scholz did not want to comment on this at the weekend. The defense initially took over others.
Opposition agrees to level of planned loans
“In the face of such serious allegations, however, the Bundesrechnungshof must then also say with what money it wants to support companies in the crisis and to stabilise the social security funds,” Eckhardt Rehberg, chief housekeeper of the CDU/CSU parliamentary group in the Bundestag, told Die Welt. It is right to put everything into the 2020 budget now. “This gives a realistic chance that the debt brake will not have to be suspended again this year or next,” says Rehberg.
The level of the planned net borrowing is also considered justified in the ranks of the opposition. “It is clear that in this historically deep economic crisis, the state must respond with a very large credit program in order to prevent worse,” said Sven-Christian Kindler, the Greens’ budget spokesman.
The Basic Law does not say anything concrete about the permissible amount. “In the end, the interpretation is decided by the majority in the Bundestag.” There is no case-law on this matter so far.
For the officials of the Federal Audit Office, a second supplementary budget is simply superfluous. The additional net borrowing would also be so high because the Federal Government does not want to touch on a reserve of 48.2 billion euros, which is saved from surpluses of the 2015 to 2019 budgets, known as the asylum or refugee reserve, but wants to keep it for the 2021 federal budget.
These billions should now be used. The highest federal authority even considers this to be constitutionally necessary. The re-use of an exceptional emergency situation would be prohibited if other cover options were available. It was precisely for such a purpose — compensation for unplanned additional charges – that the reserve was finally created.
According to the Court of Auditors, there is no shortage of resources for crisis management. However, in addition to raising the reserves, corrections to the stimulus package are also necessary. If the federal government renounces the “economically controversial temporary reduction of the sales tax” and the Länder If it contributed to the costs, an additional net borrowing “could be avoided without further ado,” it said.
At the presentation of the supplementary budget, Olaf Scholz spoke of a “power reserve” for the future and defended the record debt. “Less wouldn’t be enough,” he said.
The Court of Auditors considers this argument to be ‘unconvincing’. It gives the false impression that strict observance of the constitutional debt rule would block the federal government’s ability to act. The opposite is the case, as the first supplementary budget showed.
The inspectors recall the disciplining effect of the brake. “The consistent application of the debt rule is also effective because it forces us to consider setting priorities in good time and to consolidate federal finances sustainably,” they write. In other words, politics should not make it too easy.
Constitutional lawyers are at an disagree
There are different assessments on the part of the constitutional lawyers. Joachim Wieland, professor at the German University of Administrative Sciences in Speyer, disagrees with the Federal Audit Office. “A buffer for the future is not unusual in a household,” he told Die Welt.
It is at the political discretion of the Federal Government and the Bundestag what precaution they consider necessary in view of the currently hardly predictable further development of the pandemic. “Only if it were obvious that the funds available are not needed – which is hardly conceivable in the current circumstances – could the question arise whether the economic requirement has been violated,” Wieland said. In the case of negative interest rates on government bonds, however, he sees no indication of uneconomic action by the state.
Ex-constitutional judge Ferdinand Kirchhof sees this not quite so clearly. Although he did not wish to comment on the specific budget, he recalled the key messages of the relevant articles of the Basic Law – in addition to Article 115, this is Article 109. According to Kirchhof, it is clear in principle that the wording, history and scheme of the two articles are clear, that loans to this extent are only possible as an exception with the aim of remedying an emergency situation and that the principle of the credit-free budget applies.
“The extraordinary emergency is, as we say, the reason and the limit of credit,” he told Die Welt. Kirchhof was Vice-President of the Federal Constitutional Court until 2018.
At least the Federal Audit Office may not see that the reserves of power untouched by Scholz are directly related to the Corona emergency.