The commissioned committee tasked by the federal government with reforming the “debt brake” has been unable to reach a unified concept. According to the “Süddeutsche Zeitung”, Finance Minister Lars Klingbeil (SPD) is expected to present three distinctly different proposals next week, contrasting with earlier reports from the “Frankfurter Allgemeine Zeitung” which suggested only two reformed models would be put forward.
The recommendations stem from a diverse pool of members: Union and pro-Union faction representatives, one specialized expert from the SPD, and two economists, Philippa Sigl-Glöckner and Isabella Weber. Unlike the pension reform, the coalition of CDU, CSU, and SPD cannot rely on this expert panel to arbitrate disagreements.
Overall, the consensus within the expert committee, which is chaired by coalition politicians Stephan Weil (SPD), Reinhold Hilbers (CDU), and Stefan Müller (CSU), is that restricting structural deficits is fundamentally appropriate for controlling national debt. Furthermore, there is agreement that defense expenditures should eventually be reincorporated into the federal core budget and subjected to the rules of the debt brake in the medium term. However, discussions ended there, as all other proposals failed to garner the necessary two-thirds majority.
The Union’s concept, which its representatives have dubbed a “breathing debt brake,” maintains the structural household deficit limit at 0.35% as long as the overall debt level remains above 60%. Under this scenario, defense spending would be gradually transferred back into the regular budget between 2029 and 2035. This move, however, would reduce the federal government’s borrowing flexibility by more than 100 billion euros per year-an operation that seems arguably challenging given tax revenues of around 400 billion euros without significant disruption.
In contrast, the proposal from the SPD and its allies-internally termed the “investment-oriented debt brake”-calls for a longer transition period for the Bundeswehr, extending to 2040. It also suggests partially exempting expenditures for future projects such as railways, bridges, digitization, and education from the credit regulations. To support this, the federal and state governments should be allowed to spend an additional 0.8% of GDP annually for investments, on top of the structural deficit ceiling. This would raise the total annual borrowing capacity of the state to 1.5% of economic output.
Finally, the recommendations from Sigl-Glöckner and Weber shift the focus away from the absolute debt ratio, concentrating instead on the multi-year trend of public spending. Their aim is to comply with the debt regulations of the European Union, rather than introducing unnecessarily stricter national rules. Moreover, they propose that investments not be privileged over other state expenditures, thereby avoiding placing constitutional restrictions on elected policymakers. In addition to limiting national debt, they advocate for enshrining full employment as an equally vital objective within the constitution.
