On the wrong track, comment on the debt brake by Angela Wefers Frankfurt (ots) – The debt brake is facing a practical test, not just since Chancellor Helge Braun (CDU) has upset his friends with his reform idea and enthused political rivals. This in itself should be an alarm signal. Anyone who accuses Braun of wanting to completely suspend the debt brake is doing him an injustice. He calls for a binding mechanism in the Basic Law to gradually bring the new debt back into the rules and then to zero.
The reform idea reveals a shortcoming in the debt brake in times of crisis. Income and expenditure of the state can be balanced without loans, but there is an emergency exit: In the event of natural disasters or exceptional emergency situations, the Bundestag can approve more loans than the debt brake allows. For 2020 and 2021 he did this. However, the Basic Law would not prevent Parliament from making a dangerous permanent situation out of it with imaginative reasons. A flood or an earthquake are punctual events with determinable damage. A pandemic of uncertain duration is different.
At the same time, Braun is on the wrong track: During the time until he returns to the rules, he wants to spend more money than the debt brake allows in order to keep taxes and social contributions stable without increasing income. The economy should get on its feet quickly. That is good, but the journey is daring, even if a fixed date is set. There is nothing to suggest that the federal government will be able to comply with the debt brake more easily in five, seven or twelve years than in 2022. The system also breathes with the economy in regular times. At least 33 billion euros in new debts can be incurred by the federal government in 2021 without breaking the rule. That is close to the pre-pandemic peak.
Loans that exceed the limit of the debt brake in the long term mutate into a budgetary vice. The debt brake demands the repayment of excessive debts. The repayment obligation reduces the financial leeway with which a government can shape in later years. Without higher taxes and social security contributions, the economy recovers quickly and automatically flushes more money into the state coffers via the automatic stabilizers. Otherwise, the state may not continue to pretend that it can buffer away all pandemic damage. There is then no avoiding spending cuts. Stable finances have proven to be a blessing, especially during the crisis.
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