One must truly be grateful to the ancient Babylonians that in ancient times they began to divide the year, day and night into twelve sections each. If this orientation did not exist, the traffic light coalition’s dispute over the 2025 federal budget would probably continue forever. But one thing is clear: A solution must be found by Friday as to how the remaining gap in the draft budget can be reduced from 17 to nine billion euros and thus to a level that budget experts consider acceptable. On this August 16th, at midnight, the deadline expires within which the government must submit the budget law to the Federal Council, which is initially responsible.
The cabinet would have to approve all changes as early as Wednesday, so the deadline actually ends two days earlier. The talks that Chancellor Olaf Scholz (SPD), Vice Chancellor Robert Habeck (Greens) and Finance Minister Christian Lindner (FDP) are currently holding are correspondingly intense – some of them while on vacation.
Cutting social spending? That would not go down well with the SPD
According to previous plans, in order to raise the missing eight billion euros, remaining funds from the financing of the gas price cap were to be reallocated and planned subsidies to the railway and the state-owned Autobahn GmbH were to be converted into loans. Such loans have the advantage that Lindner could finance them himself on credit, regardless of the debt ceiling in the Basic Law. However, fearing another defeat before the Federal Constitutional Court, the minister commissioned two experts to legally examine the proposals. Since the expert reports were available, the Chancellery and the Finance Ministry have been throwing themselves into conflicting interpretations.
A few days before the deadline, it is still unclear which instrument can be used and whether further savings are necessary elsewhere, such as in the social budget. The only thing that is clear is that the proposed re-allocation of the gas price cap funds would probably be unconstitutional and will therefore not be pursued further.
Scholz, on the other hand, would hardly be able to push through further cuts in social spending in his own parliamentary group. This means that attention is once again turning to the loans to Deutsche Bahn and Autobahn GmbH. According to information from the coalition, both loans could amount to four billion euros each and would have to be constructed in such a way that they could not be classified as “hidden subsidies” that serve solely to circumvent the debt brake.
This would be relatively easy for Deutsche Bahn, which has already received such loans on a number of occasions. It would have to pay a – relatively low – interest rate and repay the loan over around 34 years. This corresponds to the average lifespan of a railway line. Lindner has suggested an alternative of increasing equity capital by 3.6 billion euros. However, in order for the transfer to be considered debt brake-neutral, Deutsche Bahn would have to use this capital in such a way that it generates a decent return. The consequence could be that the company increases the track access prices that it charges competitors. But the federal government wants to avoid this.
Autobahn GmbH could receive a share of the toll revenue
The loan to Autobahn GmbH is more problematic. It has no income of its own and could therefore not repay the money it borrowed. The coalition had therefore considered providing the company with the necessary annual repayment funds in the form of a subsidy – a construction that is considered to be at least questionable under constitutional law.
Instead, there is now discussion about giving the company a small share of the federal government’s revenue from the truck toll, thereby providing it with the required “own income”. An example calculation: If the GmbH received a loan of four billion euros, the usual depreciation period for a highway of 30 years would result in annual repayments of a good 130 million euros. That would not even correspond to a hundredth of the total toll revenue of a good 15 billion euros per year.
It is also being considered to make six billion euros available instead of four, because despite all the federal grants, there is still a lack of money for the highway renovation. In the example calculation, the repayment burden increased to a still manageable 200 million euros.
However, the Chancellor and Finance Minister were in disagreement until the very end as to whether the necessary changes to the law could be implemented before the budget was passed shortly before Christmas. Perhaps a look at the calendar – the Gregorian calendar is best – will help Scholz, Lindner and Habeck.
