Germany's Finance Minister Olaf Scholz wants the federal government to relieve debts for small towns. But the move would require a constitutional amendment, and may put another crack in Angela Merkel's coalition.
But it might not be that easy, since the move would break a taboo in Germany's debt-averse conservative government that has been enshrined in the constitution since 2009, when a "debt brake" was written into the Basic Law in the aftermath of the European financial crisis.
Die Zeit newspaper reported on Wednesday that Scholz, who is also Vice Chancellor to Angela Merkel, is planning to present a plan in March that would temporarily allow some 2,500 municipalities to pass on their debts to the federal government.
The scheme is meant to free up resources to allow local governments to invest more in roads, schools, and hospitals, the report said. While many small towns struggle to pay for insfrastructure, the federal government has some capacity to spare: In January, Germany posted a record-breaking budget surplus.
The Finance Ministry would not comment on the press report, though it was also independently reported by Der Spiegel. Both outlets cited unnamed ministry sources.
The black zero
The debt brake meant that as of 2016, Germany's federal and state governments were not allowed to run a budget deficit of more than 0.35% of GDP, though exceptions can be made in the event of natural disaster or economic crisis.
The brake has manifested itself recently through the so-called "black zero," the colloquial name for the German Finance Ministry's insistence on maintaining a balanced budget without taking on new debt.
Scholz has been committed to maintaining the policy, at least until now, despite being a member of the center-left Social Democrats, some of whose members are skeptical of the black zero.
But the move promises a political headache: Scholz may have trouble getting the plan through parliament without putting another crack in the government coalition.
Support from government ranks is not at all secure, and members of Angela Merkel's center-right Christian Democratic Union (CDU) have already voiced criticism.
"You can't just suspend the debt brake at your convenience, just as you can't suspend basic rights," CDU Bundestag member Eckhardt Rehberg told the Frankfurter Allgemeine Zeitung on Wednesday. "Scholz has no majority for breaking the dam. He should bury this project quickly."
Not only that, altering the constitution requires a two-thirds majority in both chambers of parliament, the Bundestag and the Bundesrat, which would mean that, even with CDU support he would need opposition votes to pass the bill.
bk/aw (AFP, dpa)
'Father of the black zero': Germany's love affair with austerity
Former Finance Minister Wolfgang Schäuble was "the face" of the black zero, which came to be the most visible symbol of Germany's national obsession with a balanced budget.
Image: picture-alliance/dpa/B. Weissbrod
Father of austerity
Former Finance Minister Wolfgang Schäuble was "the face" of the black zero. His 2014 financial plans led to Germany not taking on new debt for the first time since 1969, resulting in a balanced budget. It was achieved by financing spending hikes solely with revenues while reducing public debt.
Image: picture-alliance/dpa/W. Kumm
Have your cake
Germany's appreciation for penny-pinching to ensure it didn't rack up fresh debt elicited many wacky homages. Seen here is a "black zero" cake presented to the state parliament of Lower Saxony by the neoliberal Free Democrats (FDP) in 2015.
Image: picture-alliance/dpa/H. Hollemann
'Debt brake' introduced in 2009
In 2009, Germany's constitution was amended to include a "debt brake," ("Schuldenbremse"), despite economists largely agreeing that it does not reduce economic volatility. German states were not permitted to run any structural deficits, and the federal government could only run a structural deficit of less than 0.35% of GDP.
Image: picture-alliance/dpa/R. Jensen
Debt or guilt?
It is something of a linguistic testament to a cultural truth that the German word for debt, Schuld, is also the word for guilt. Germans are content to live with decaying infrastructure, renting instead of buying and not having modern-style credit cards if it means reducing debt. Here, Baden-Württemberg's then-Finance Minister Nils Schmid celebrated the "black zero" with a statue in 2014.
Image: picture-alliance/dpa/B. Weissbrod
'Black zero' questioned
When Germany was thought to be heading toward recession in 2019, the wisdom of a balanced budget was challenged. Germany's resistance to spending and investing created an economy with little room for innovation, expansion or for startups to flourish. According to the keenly watched ifo Business Climate Index "not a single ray of light was to be seen in any of Germany's key industries" that year.
Image: Imago Images/C. Ohde
EU neighbors suffer
Germany's penchant for a balanced budget not only hindered investment in the country, it also affected its neighbors. As an export-driven economy, Germany profits from exporting goods, but insufficient reinvestment of all that extra capital, paired with a low-wage policy that stymied spending, meant the surplus remained stubbornly high, at the expense of other EU countries.
Image: Imago Images/S. Steinach
Point of pride
Across Germany, being debt-free has been marked with strange celebrations, including members of the Christian Democrats posing with a cardboard cutout of a black zero. The city of Dusseldorf even kept a clock marking how many years it has been debt-free, seen here in March 2016. (This gallery was updated on December 27, 2023, on the occasion of Wolfgang Schauble's death.)
