Always trouble about the debt brake – almost every day an SPD politician questions whether the debt brake can take full effect again in the coming year. At the beginning of the week, it was once again SPD leader Saskia Esken who doubted a return to the debt brake given the burden on citizens from high prices.
She is “of the fairly firm conviction” that the “crisis situation” of the past pandemic years has not yet been overcome, now “the new crisis situation, namely the war” is added.
According to Kevin Kühnert, General Secretary of the Social Democrats, the representatives of the governing coalition will look each other in the eye in the autumn to decide whether the debt brake will be suspended for another year. “Can you keep a society together with the budgetary framework set before the war, or do we have to open up new leeway?” he asked.
At the weekend, Federal Labor Minister Hubertus Heil (SPD) spoke of reassessing the issue if Germany were to slide into a “massive recession”.
Inflation, social cohesion, recession are the buzzwords with which the Social Democrats want to justify special spending in the coming year. The abundance of requests to speak gives the impression that it is a purely political decision as to whether the debt brake will be complied with in 2023 for the first time since 2019. Ultimately, however, it is a constitutional question.
Because the debt brake is in the Basic Law. It was written there after the financial crisis to prevent the responsible politicians from accumulating more and more debt without need and thus endangering the country’s financial stability.
Ferdinand Kirchhof, Vice President of the Federal Constitutional Court until 2018, currently sees no legal basis for suspending the debt brake decided in 2009 again. “Unspecific considerations, the budget will probably be heavily burdened and the previous spending behavior cannot be continued, are not enough,” says Kirchhof. Then savings have to be made elsewhere.
There is the possibility of suspending the debt brake due to an “extraordinary emergency situation”, as the law states – as happened in 2020, 2021 and 2022 with reference to the fight against the corona pandemic and the burden of the Ukraine war . “The general fear that a recession will set in is not enough, because economic fluctuations are part of normal, foreseeable economic events,” says Kirchhof.
One can only speak of an emergency situation when concrete, sudden events threaten the financial situation, when a deadly epidemic suddenly breaks out in Germany or the war in the Ukraine is carried to Germany. “Everything else has to be covered from the current, normal budget,” says the constitutional lawyer.
The legal scholar Hanno Kube from the University of Heidelberg refers to the duration of the crisis situation in the country. The exemption in the event of an “extraordinary emergency” was justified with the possibility of “exogenous shocks”. “Emergency borrowing is intended to help if a sudden crisis-related financial need cannot be covered elsewhere,” says Kube.
On the other hand, the longer a crisis lasts, the more it becomes a structural challenge, and the more demand is placed on general politics. He mentioned tax adjustments and spending cuts as keywords. In the event of an impending recession, the economic component was created precisely for this purpose, which in turn opens up considerable leeway. According to the previous budget, 9.9 billion euros in new debt can be taken on in 2023.
From the point of view of the two constitutional lawyers, a recession caused by skyrocketing energy prices is not enough to put the brakes on again and increase the federal government’s mountain of debt by a three-digit billion amount for the fourth year in a row.
However, as is often the case with lawyers, there are also other legal opinions: For the constitutional lawyer Joachim Wieland from the German University for Administrative Sciences in Speyer, on the other hand, the war in Ukraine with its consequences for the energy supply and security of Germany as well as a new wave of the pandemic very well be enough to suspend the debt brake again.
Wieland goes even further: “In my opinion, which does not correspond to the prevailing opinion, against the background of the case law of the Federal Constitutional Court, an emergency situation can also be justified with the climate crisis with its costly compulsions to act.” So there could be several reasons for the declaration in autumn give an emergency situation.
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