Budget verdict: “Rollback for climate protection” and “Slap” to traffic lights

2021 budget stopped
“Gigantic slap” to traffic lights: union welcomes budget verdict – harsh criticism from environmentalists

Alexander Dobrindt, leader of the CSU regional group

© Kay Nietfeld / DPA

Despite the debt brake, the federal budget for 2021 was increased by 60 billion euros; the money went to climate protection. Karlsruhe now declares the maneuver unconstitutional. Reactions to this are mixed.

The Federal Constitutional Court ruled that the federal government cannot use funds intended to combat the coronavirus crisis for climate protection. The amendment to the supplementary budget for 2021 is unconstitutional, Germany’s Supreme Court announced on Wednesday in Karlsruhe. This is about the effectiveness of the debt brake, the president of the Second Senate, Doris König, stated in the announcement. The Union faction in the Bundestag has successfully filed a lawsuit against the redeployment. (Ref.2 BvF 1/22)

The government factions in the Bundestag are prepared for this scenario, said the parliamentary director of the SPD parliamentary group, Katja Mast. She initially sees no direct impact on the federal budget timeline for 2024. “At this point, my assumption is that we will still pass the budget on December 1 and that the housekeeping meeting will take place as normal tomorrow.” At this meeting, the Budget Committee will make final changes to the 2024 budget.

Reactions to the verdict are mixed. While the Union is satisfied with the news from Karlsruhe, climate and environmental activists express massive criticism.

“Relief” and harsh criticism of the Karlsruhe budget decision

The leader of the CSU regional group, Alexander Dobrindt, considers the sentence a “giant slap” for the traffic light coalition. “The traffic lights blow up your dubious budget policy,” Dobrindt told the newspapers of the Bavaria media group. The government took “billions that it should not have touched to finance its green-left pie-in-the-sky castles,” Dobrindt further criticized.

The court has put an end to its “cheating policy,” CSU general secretary Martin Huber told the newspapers. Huber warned that all the traffic light budget planning was no longer applicable. “Whoever is not capable of establishing a budget in accordance with the Constitution is incapable of governing. The traffic light has failed in all areas,” continued the CSU politician.

The Union’s parliamentary secretary, Thorsten Frei (CDU), was relieved by the verdict. “Karlsruhe arrives at the parade at the traffic light,” Frei told the “Spiegel.” “If the ‘traffic light’ had had its way in its bypass maneuver, it would have caused serious damage to the financial system,” he added.

However, massive criticism comes from climate and environmental organizations. According to the environmental organization Greenpeace, the ruling represents a “serious setback for climate protection.” “Now the traffic light wanted to pay for the climate-neutral restructuring of the economy with financial policy tricks,” complains Greenpeace Germany CEO Martin Kaiser. Loans, new taxes and reducing climate-damaging subsidies should no longer be taboo.

Kaiser called on Chancellor Olaf Scholz (SPD) to use his policymaking authority in the face of the climate crisis. “Because we are already in the middle of the climate crisis. Loans, new taxes and dismantling climate-damaging subsidies should not be taboos.” The budget needs a better balance between military spending and greater climate protection, as well as new socio-ecological instruments in financial policy.

“Wirtschaftsweiser”: possible limitation of damages

For Norbert Walter-Borjans, the ruling demonstrates the “extreme design flaw of the debt brake.” The former SPD leader and former NRW Finance Minister told “Spiegel”: “It is a brake on the future, because it prevents necessary investments. If the government tries to get around this through the back door, the budget situation becomes confusing.” . Now Karlsruhe clarifies that the ruling requires clear regulation. “The government has to clean this up,” Walter-Borjans said.

However, the “economic savant” Achim Truger also sees opportunities here to limit the damage. “The ruling is a heavy blow for the federal government. The climate and transformation fund must be cut by 60 billion euros,” said socioeconomist Truger of the German Press Agency. “But there are still pragmatic ways to limit the damage.”

The cleanest and most fundamental solution is debt brake reform. “You could, for example, stipulate that after a crisis you only have to gradually return to the debt rule,” Truger suggested. It is also possible to continue using the debt brake exception rule and declare an emergency for several years because households continue to be affected. As an alternative, Truger proposed compensating for the lack of revenue in the budget through a temporary energy or climate solidarity measure.

Emergency money turned into climate funds

Due to the emergency situation during the coronavirus pandemic, the federal government subsequently increased the budget for 2021 by 60 billion euros in the form of a loan authorization. In such exceptional situations, it is possible to apply for loans despite the debt brake.

In the end, the money was not necessary to deal with the pandemic and its consequences. For this reason, the federal government, made up of the SPD, the Greens and the FDP, wanted to use the money for the so-called climate and transformation fund and, with the approval of the Bundestag, reallocated it retroactively in 2022. 197 members of the group Union parliamentarians in the Bundestag filed a lawsuit in Karlsruhe because, in their opinion, this would prevent the debt brake.


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