KRisenkampf seems to have a new motto: the more, the merrier. Chancellor Olaf Scholz proudly called it “double boom” last week when he presented the new program against high energy prices. Up to 200 billion euros are available – in new debt. Finance Minister can do that Christian Lindner promise for so long that the debt brake will be adhered to again next year – this year he is borrowing a huge sum of money for the time being.
But now debt has become fashionable. In Great Britain, the new finance minister has announced a tax cut that will also increase the national deficit by a total of almost 200 billion euros over the next five years. In Italy, on the other hand, the new head of government is committed to a balanced budget, but has nevertheless announced tax cuts that have not yet been financed.
In the end, the German state will probably not spend the full 200 billion. But the new rescue package is not the first debt program this year either: the traffic light coalition put 100 billion euros into a fund for the armed forces60 billion euros in an energy and climate fund, and the previous government had already started in the Corona times.
Debt rhetoric succeeds – at the wrong time?
The rhetoric of the past few years has been successful. The state budget was solid, the country’s debt was falling, interest rates were close to zero or even below, and inflation was rather too low. In such a situation, it was no wonder that many people called for debt: the state should rather finance its spending through loans, perhaps put the money into investments. But now the situation is different. Inflation has risen to ten percent, interest rates are already rising noticeably again. Is such a loan the right step now?
This much is certain: the federal government’s spending program cannot be lifted with taxes. The traffic light coalition has approved a total of 360 billion euros in debt for funds that run alongside the normal budget. Add to that the already inflated regular state spending – that’s more than double the spending from the years before Corona. In other words: 360 billion, to cover that this year, the state would have to double the entire wage and income tax.
Or to put it another way: if the revenue were to be collected via wealth tax, every German would have to pay five percent – with no exception for grandma’s little house. Alternatively, the state would have to completely expropriate the 17 richest Germans, list their companies on the stock exchange and sell their shares – and then the question would remain as to who should buy all this.
With debt, on the other hand, everything seems easier at first. Even after all the Corona aid, Germany’s debt level is currently at a tolerable 70 percent of economic output. The 360 billion euros are almost exactly ten percent of German economic output and will be brought in over several years. However, the ten percent inflation is not only a concern: it also helps to put the old mountain of debt into perspective. It hardly seems to matter that the state has to pay two or three percent interest again.