The federal and state governments are arguing about financing relief measures – Germany

The traffic light coalition has launched three relief packages with a total value of almost 100 billion euros. They should cushion the consequences of the crisis. When it comes to financing, pits open up.

In view of the increasing burden on public budgets from state aid measures worth billions during the crisis, a renewed debate about the debt brake has flared up. The federal states are also criticizing the distribution of the costs of the relief measures agreed by the traffic light between the federal and state governments. Individual countries are threatening blockades in the Bundesrat.

Lower Saxony’s Prime Minister Stephan Weil (SPD) said that at the Prime Ministers’ Conference on September 28, agreement should be reached that one is in an emergency and that the restrictions set by the debt brake must be suspended. “I can’t imagine that we can get through this situation without at least partially borrowing,” emphasized Weil.

The debt brake anchored in the Basic Law stipulates that the budgets of the federal and state governments must be balanced without income from loans. In the event of natural disasters or other emergencies, however, the debt brake can be suspended, which happened in 2020 and 2021 because of the pandemic.

Countries complain about the lack of coordination

Federal Finance Minister Christian Lindner (FDP) sees no reason to do this again. In the ARD he said: “We cannot permanently incur debts to compensate for the loss of prosperity.” The citizens would have to pay back these debts. For him it was clear “that we have to combine the necessary help, even with the high gas prices, with a clear commitment to the debt brake”.

Bavaria’s Prime Minister Markus Sder (CSU), on the other hand, said: “The federal government should be honest: while the federal states’ hands are tied by the debt brake, the federal finance minister is dealing in shadow budgets with gigantic billions.”

The federal states complain that the federal government does not coordinate with them when it comes to financing aid for citizens. “The relief package cannot be approved in its current form,” said Sder. Baden-Wrttemberg had previously threatened to say no to parts of the bundle of measures in the Bundesrat.

Above all, the dispute revolves around the distribution of costs. Bremen’s mayor Andreas Bovenschulte (SPD) said: “If the division proposed by the federal government is retained, the relief packages will cost Bremen (…) almost 300 million euros.” The federal government must improve. Sder spoke of decisions that could not be financed by the federal states as part of the debt brake. Never before have they been treated so badly by a federal government. Saxony-Anhalt’s Prime Minister Reiner Haseloff (CDU) called the federal government’s actions irresponsible.

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