In the dispute over the 2024 federal budget, Economics Minister Habeck wrote internal letters to Lindner and indicated that taxes would have to be increased or the debt brake relaxed. But the finance minister declines. He has the upper hand here.
There is an open dispute in the traffic light coalition over the preparation of the federal budget for 2024. The Greens are concerned that the SPD and FDP will agree on spending requests worth billions for their own projects. Vice-Chancellor Robert Habeck and Finance Minister Christian Lindner write letters to each other that begin very formally with “Dear Colleague”. And SPD leader Lars Klingbeil, visibly annoyed, repeatedly warns the smaller coalition partners not to express their differences in public.
However, the power in the budget dispute between Habeck and Lindner is clearly distributed. “Don’t be afraid, that won’t happen,” the FDP leader announced almost pastorally, pointing out that Habeck was talking about increasing income, but mean tax increases. When it comes to drawing up the budget, Lindner’s ministry is in charge of the procedure. And ex officio required to curb the spending requests of all departments. His back is strengthened by the Basic Law: The debt brake is anchored there, which sets a limit to excessive desire.
The budget is clearly defined. The Ministry of Finance sets the tone from the start. In his “Letter of Statement” for the 2024 budget on January 3, Lindner laid down the line that “from 2024 the turning point in financial policy must be implemented consistently”. An end to the “expansive financial policy course” that had led to the suspension of the debt brake from 2020 to 2022 as a result of the corona pandemic and the Ukraine war in order to incur hundreds of billions of euros in new debt. In 2023 the brakes will come into play again. This should also apply in 2024. This is what the SPD, Greens and FDP agreed in the coalition agreement.
A core concept of budget planning are the benchmarks and the first milestones. Behind this is a complicated procedure that has strengthened the role of the Ministry of Finance as treasurer since the 2012 budget was drawn up. Since then, the ministry has been using previous financial plans, new spending decisions and political projects to calculate benchmark figures for how much money each department will have available in the coming year – assuming that the overall budget complies with the debt brake.
A benchmark proposal is created. This is called a “top-down procedure” because the Ministry of Finance provides the framework in which the ministries can operate and restructure. By the 2011 budget, the wishes of all departments had been collected and then laboriously slowed down again. Not departmental wishes, but political priorities, the economic framework and constitutional requirements should mark the course.
Since 2014 it has been a tradition that a closed meeting of the state secretaries of all ministries initiates the list of benchmarks. The group is led by Werner Gatzer from the Ministry of Finance. It took place on January 13th. Gatzer specified an austerity course: Twelve billion euros should be saved in order to comply with the debt brake. His presentation sets the spending limit for 2024 at 423.7 billion euros based on the current financial plan up to 2026.
In the meantime, one can assume additional tax revenue of around 16 billion euros for 2024 – but also 31 billion euros in additional burdens that are not included in the financial plan. These are, for example, the housing benefit reform, the Inflation Compensation Act and a significant increase in interest payments. Since the scope for debt could be around three billion euros higher than assumed, there remains a “need for action” of around twelve billion euros. A month later, the Ministry of Finance added up the spending requests that had been received from all ministries since then. Together they are 70 billion euros above the spending limit mentioned by Gatzer. A corresponding report by the “Handelsblatt” was confirmed in ministry circles.
The talks with the bosses will take place over the next few weeks. What cannot be decided between the ministries at the technical level must be cleared up by their bosses – in an interview with Finance Minister Lindner. The plan is for the key figures to be in place by early March and for the cabinet to decide on March 15. The detailed negotiations will then continue, and the tax estimate in May will show whether there is more or less scope for spending. Before that, the government issued a new economic forecast in April. On June 21, the cabinet is to decide on the draft budget.
The budget law will not be passed by the Bundestag until the end of the year. Until then, the draft will be changed again and again in countless places. The householders have the last word in the night of the long knives, the so-called clean-up session – then final changes to the budget are made in a night session.
