Social Democrat (SPD) Finance Minister Olaf Scholz presented his first budget proposal Tuesday, kicking off four days of debate on the topic in Germany's parliament, the Bundestag. Germany's budget is the topic of scrutiny not only at home, but also abroad, as it touches on a number of issues relevant beyond its own borders, namely European finance and banking, as well as military expenditures.
Key points in Scholz's first budget
-- In all, it foresees total government expenditures for 2018 at €341 billion ($404.5 billion).
-- The "black zero" (a budget with no new state borrowing) will stand, despite the ministry changing hands after last year's election.
-- Infrastructure, education, research and digitalization investment is to be increased by some €2.44 billion.
-- Domestic security spending is scheduled to increase by 11.5 percent over 2017, to a total of €9.2 billion.
-- Defense spending is proposed to increase by €1.6 billion over last year's budget, totalling €38.5 billion.
-- Refugee related expenditures, including €6.6 billion for fighting the causes thereof, are to total €21.4 billion.
-- Welfare expenditures (€173.8 billion) are by far largest portion of the budget, accounting for some 51.1 percent of spending, with most of that going to pension payments.
Justification, support and criticism
Scholz defended his budget in light of the larger debate on whether investment was more important than a balanced budget saying: "Both are possible, more investment without new debt."
Alternative for Germany (AfD) parliamentarian Peter Boehringer, who chairs the Budget Committee, complained that instead of providing relief to citizens, "GroKo [German shorthand for 'Grand Coalition'] stands for great costs." In particular, the euroskeptic party member cited upcoming costs like a possible extension of emergency loans for Greece, saying that such costs should be audited within the budget.
Green Party budgetary spokesman Sven-Christian Kindler called the budget, "A false start from Olaf Scholz. Instead of hammering out more cash for new tanks and drones, the government should invest in conflict prevention, fighting hunger and protecting the climate."
"The government is spending money like there is no tomorrow. If you look at the way welfare spending is going, we are looking over the cliff and they are stepping on the gas," said the leader of the pro-business Free Democrats, Christian Lindner.
Scholz garnered praise from SPD budgetary spokesman Johannes Kahrs: "We are providing relief to citizens, strengthening domestic security and increasing spending for families, children, education and job training."
Christian Democratic Union General Secretary Annegret Kramp-Karrenbauer seemed to lament the lack of substantial defense spending increases with a series of tweets highlighting the fact that Germany must maintain the ability to "defend its citizens and country, its partners and interests, militarily if necessary."
One for the future:
In a nod to new French President Emmanuel Macron, Finance Minister Scholz indicated that Germany was willing to consider a new, permanent mechanism to replace the Eurozone's temporary debt umbrella, the European Stability Mechanism (ESM). Plans to set this in motion seem at least five years away.
What comes next:
This year's budget is so far behind schedule because of the four-and-a-half months Germany needed to forge a governing coalition after its September 2017 elections. The budget debate in the Bundestag will continue until Friday and a final vote is expected in early July. That will be just in time for the summer recess if all goes as planned. Soon after their return, politicians are set to start debating the 2019 budget.