Olaf Scholz probably imagined his time as finance minister a little differently, nobody expected the corona crisis. But his term of office will be over in a year. Then Scholz is either chancellor or parliamentary group leader or backbencher or pensioner.
The budget that the Bundestag budget committee completed on Friday night is its penultimate one. In spring, Scholz still has to present the key points of the budget for 2022. Not an easy task in view of the uncertainties and the new debt that has built up, which has reached breathtaking levels within two years. The government has had 218 billion euros in new loans approved by the Bundestag for 2020. Now another 180 billion will be added for the coming year, far more than the originally planned 96 billion.
Together this makes a planned new debt of almost 400 billion euros. However, it is still unclear whether the government will have to fully exploit the framework. It could boil down to actual borrowing two or three dozen billion lower in 2020. Of course, we still don’t know for 2021 whether the credit authorization will end up being too high or too low. It is foreseeable that Germany’s debt burden will ultimately be at least 350 to 380 billion euros higher.
Out with “boom”
So the next head of department is not to be envied. After the corona crisis, but not just because of it, the times are over when the federal finance ministers were able to distinguish themselves with lavishly filled budgets or energetic slogans such as “Bazooka” or “Wumms”.
Whoever it will be, he or she has a slightly different task ahead of him: The consequences of the budgetary policy of the years before must be ironed out. Namely those of the wonderful surplus years up to 2019 as well as those of the arduous Corona years. The job profile must therefore be: It’s about tidying up, not about furnishing.
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One reason is the need to repay a considerable part of the loans that are now being taken out – that is what the debt brake sets. In total, according to the target calculations, it is around 280 billion euros. These are to be repaid over a period of 20 years starting in 2023. For the first time, politicians have to face the fact that debts are a burden that you actually have to take into account. And not immortalized, so to speak, on the way to permanent refinancing. It is also the need for repayment that suggests not to misuse the corona credit authorizations in view of the federal election in 2021.
End of the reserve and cornucopia economy
Another reason is the cornucopia economy of the past election periods. The federal government in particular had money beyond its ability to spend it reasonably wisely. This accumulated reserves that, according to the Court of Auditors, have now risen to 48 billion euros, i.e. a seventh of the budget in pre-Corona times.
This will now fill holes in the financial planning for the next few years, because the coalition, regardless of Corona, has already planned more expenditure than the current level of income. And there is a lot of money wandering aimlessly in the budget because it does not flow away – funds for schools, for building, for the municipalities, the ecological conversion.
Measure and center
So what has to start after the federal election is a fundamental rethink in budget policy. It has to become more balanced and sustainable again. It must be aligned to measure and center. In terms of tax policy, this does not rule out moderate tax relief or sensible increases. But you shouldn’t abandon the principle of limiting debt because you don’t think you can get by any other way. Because it turns out that the budgets in the normal status have too much volume. But it is not the job of the rulers to sit on the citizens’ money permanently.
The risk that the emergency Corona budgets, these two monster budgets, will make solid budgetary policy more difficult is not small. Just as the zero interest rate policy, which was also inevitable at times, has obviously also spoiled morals. Anyone who gets into a debt frenzy because loans look so wonderfully cheap overlooks the serious consequences – not least for low-wage earners and all those citizens who have fewer assets.
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