Germany faces significant hurdles in reforming its debt brake, requiring a two-thirds majority in the Bundestag. The current political landscape, with the AfD and Left holding a blocking minority, complicates swift action. Key figures, including Greens and Union leaders, advocate for discussions on enhancing defense and infrastructure spending. However, Chancellor Olaf Scholz emphasizes the need for careful dialogue between parties before any reform can proceed, with potential support from the Left contingent on social funding without rearmament.
Challenges Ahead for Debt Brake Reform in Germany
In Germany, significant legislative changes require a two-thirds majority in the Bundestag, posing a challenge for the newly elected government. The question arises: can the previous Bundestag enact a reform of the debt brake swiftly?
Current Political Landscape and the Need for Reform
Following the Bundestag elections, discussions surrounding the debt brake reform have intensified within the existing parliament. The Greens have pushed for the outgoing Bundestag to take action on this reform, while Union chancellor candidate Friedrich Merz has not dismissed the idea, also mentioning the potential creation of a special fund to support Ukraine. “Our discussions on this matter are ongoing,” Merz stated, indicating that talks with the SPD, Greens, and FDP are forthcoming.
To amend the debt brake, which is a constitutional provision, a two-thirds majority is essential. Unfortunately, the new Bundestag features the AfD and the Left holding just over a third of the seats, creating a blocking minority. Even if the Union, SPD, and Greens unite for reform, they would still lack the necessary votes in the new assembly.
According to Article 39 of the Basic Law, the new Bundestag must assemble by March 25, 2025, at the latest. If the old Bundestag is to pursue a reform, it will have to do so under considerable time constraints, potentially necessitating a special session. Together, the Union, SPD, and Greens could achieve the required majority, but the Bundesrat would also need to consent with a two-thirds vote.
So, does Germany need to reform its debt brake to regain its competitive edge?
Debate on Defense Spending and Economic Stimulus
Cem Özdemir, the Federal Minister of Agriculture, highlighted on ARD’s morning magazine that the new Bundestag lacks a two-thirds majority to amend the constitution for enhanced funding in education, infrastructure, and defense. He proposed that discussions with the existing Bundestag should take place this month to facilitate increased national defense spending.
Both Foreign Minister Annalena Baerbock and Green chancellor candidate Robert Habeck expressed support for a reform within the forthcoming weeks. Given the evolving geopolitical landscape, particularly the US government’s warming relations with Russia during Donald Trump’s presidency, questions about managing Germany’s defense budget are pressing. Habeck also emphasized the need for substantial investments to invigorate the economy.
The proposed reform is not without controversy. The debt brake, which limits new borrowing, has been the subject of debate for some time. The disagreements over applying an exception rule to accommodate aid for Ukraine were significant factors in the failure of the previous traffic light coalition, with the FDP opposing such measures.
As the deadline approaches, CDU leader Merz pointed out that the current Bundestag remains in office until March 24. “We have four weeks left to consider our options,” he remarked. He noted the blocking minority’s presence in the next Bundestag, which could hinder even proposals that might receive abstentions or rejections. “Without majorities, we cannot amend the Basic Law or appoint judges to the Federal Constitutional Court,” he cautioned.
Merz described the situation as challenging, stressing the Bundeswehr’s urgent need for increased funding. He also advocated for responsible financial management of taxpayer money. Meanwhile, Union faction managing director Thorsten Frei dismissed the notion of reform through the current Bundestag, stating that the state collects approximately 1 trillion euros in taxes annually and that a reassessment of state priorities is necessary.
Chancellor Olaf Scholz responded cautiously to the idea of a rapid debt brake reform. He suggested that any initiative must originate from dialogue between the Union and SPD, stating, “Everything else is counterproductive, and I do not want to jump the gun.” As of now, no discussions have taken place, but if they do, all options must be approached with great care, acknowledging the rarity of the old Bundestag reconvening post-election.
Lastly, the Left party may consider supporting a constitutional amendment for the debt brake reform, provided that it includes increased state funding for social infrastructure. However, they remain firm in their opposition to any rearmament initiatives, as articulated by party leader Ines Schwerdtner.