Four state finance ministers from the Green Party are pushing for a reform of the debt brake (Schuldenbremse). This initiative comes after the commission appointed by Federal Finance Minister Lars Klingbeil (SPD) to reform the debt brake failed to reach a consensus on any concept, according to the newspaper Handelsblatt.
Danyal Bayaz (Baden-Württemberg), Björn Fecker (Bremen), Gerald Heere (Niedersachsen), and Silke Schneider (Schleswig-Holstein) have put forward a reform outline in a concept paper. The paper notes that “Nearly a year after the commission was established, it has become clear that it was unable to develop and submit viable and internally consensual proposals.” Consequently, these green state finance ministers-who operate within very different coalition landscapes-are now introducing key ideas into the discussion.
According to the four finance ministers’ proposal, defense spending should not be permanently exempted from the debt brake. The document states: “The area exemption for defense should gradually phase out starting in the 2030s, with the goal of achieving its expiration as early as possible.” Concurrently, they advocate for a slightly higher borrowing allowance “to enable binding future investments.” Currently, the debt brake permits the federal government and the states a structural deficit of 0.35 percent of GDP each. The Green finance ministers propose raising this total value from 0.7 percent to 1 percent, effective starting in 2036, when the €500 billion special fund for infrastructure investments is exhausted.
A further element of the proposal is the introduction of “multi-year emergency decrees.” In times of crisis, such as the Corona pandemic, the requirements of the debt brake could be suspended to allow for increased borrowing.
