Government Deploys Various Tactics
In a dramatic turn of events, Germany's federal budget for 2025 has been approved by the black-red coalition, but not without controversy. Critics from the opposition, including the Left and the Greens, have been vocal about their disapproval of the budget, claiming insufficient investment in infrastructure and climate projects.
The coalition, however, has defended its investment strategy, with Finance Minister representing the black-red coalition announcing "massive" investments in transport, education, digitization, and social housing for the upcoming legislative period. The total investment for the transport sector alone is a substantial 166 billion euros.
SPD's Thorsten Rudolph, dismissing the criticism from the Greens, stated that they are downplaying the "largest investment offensive in years." However, the Greens' chief budget spokesman, Sebastian Schäfer, has been critical of the use of funds from the special fund for climate and infrastructure projects. He accuses the coalition of circumventing the additionality criterion.
The Institute of the German Economy (IW) has also expressed concern, concluding that the coalition only meets the ten percent investment quota in the 2025 budget through a calculation trick. Lisa Paus, former Family Minister, has accused the coalition of knowing that the Greens and Left Party combined do not have the necessary seats to file a lawsuit against the breach of the rule at the Constitutional Court.
The Greens celebrated reaching the 10-percent rule in March, but now face criticism for alleged accounting tricks. The significance of the goal achieved by the Green Party during the legislative period regarding the federal budget agreement of March 2023 is to ensure that the special fund truly results in additional investments.
The agreement to ease the debt brake and change the Basic Law in March included a requirement for an "appropriate investment quota" to be achieved in the core budget before money from the special fund could be spent. The coalition implemented this resolution in a law by choosing a calculation method that subtracts credit-financed defense expenditures from the first value (investment volume) and the second value (total budget volume), resulting in a higher investment quota.
Ines Schwerdtner, leader of the Left, claims that the government's plans do not address the investment backlog and do not benefit those who face issues such as dilapidated bridges and overcrowded trains. The Institute of the German Economy states that the politically promised focus on modernizing infrastructure with the aim of increasing growth potential remains largely unfulfilled so far.
The special fund, intended for climate and infrastructure projects, is deemed a "shell game" by the Institute of the German Economy. Paus states that the coalition's actions do not make it any better, implying that they are aware of the lack of legal recourse for the Greens and Left Party. The opposition continues to press for transparency and accountability in the coalition's investment strategies.
As the debate continues, it remains to be seen how the coalition will address the concerns raised by the opposition and whether the 2025 budget will indeed deliver on its promises of massive investments in key sectors.
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