The traffic light has agreed on a third relief package. As announced, it has actually become “bulky”. But the coalition is acting differently than promised, again with the watering can. A sentence from Scholz reveals what the government is really about.
At first glance, Christian Lindner and the FDP have prevailed in the third relief package. Because the Minister of Finance had announced “a massive package for relief across the board”. And 65 billion in additional services for households and, to a lesser extent, for companies do indeed deserve the title “massive”.
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On the surface, Chancellor Olaf Scholz (SPD) lost out. He had promised a “very precise, very tailor-made relief package”. But in the end, the traffic light parties agreed on the really big watering can in their hour-long negotiations. Anyone who meets certain criteria – pensioners, students or families with children – gets money whether they need it or not.
On closer inspection, the traffic light presents a red-green program: a lot of money for as many as possible. The FDP has – once again – prevented worse things, such as tax increases, which the SPD and Greens would have loved to have decided on, a general excess profit tax or the waiver of the dismantling of cold progression. That’s just how it is when Free Democrats govern together with two left-wing parties.
With its third package, the coalition is initially correcting mistakes made in previous decisions. Pensioners and students will now also be able to enjoy the energy price flat rate – a one-time payment of 300 euros for some and 200 euros for others. There are also retirees, for whom the statutory pension only accounts for a small part of their retirement income. There are also two groups of students: those who urgently need the money and others for whom it is extra pocket money.
The same applies to the increase in child benefit. An additional 432 euros for two children a year is a noticeable help for many families. Others don’t even notice the 18 euros more per month. “Very precise” and “very tailor-made” would look different.
On the other hand, the one-off heating cost subsidy for housing benefit recipients of EUR 415 for one person and EUR 540 for two people is on target. It has been proven that this group of people is struggling to survive financially. The planned increase of more than 10 percent is also appropriate for Hartz IV recipients in view of the current inflation.
The electricity price brake is correct and important. Private households should receive “a certain amount at a discounted price”. If you use more, you have to pay more. In this way, the incentive to use less electricity is maintained for everyone. One wonders why the coalition isn’t following the same path when it comes to gas. Rather, it is sticking to its levy, which is difficult to understand anyway, while at the same time reducing the VAT rate to 7 percent.
The electricity price brake helps. But it would be even more important to increase the supply by keeping the last nuclear power plants connected to the grid beyond the turn of the year. But for the Greens and the SPD, the anti-nuclear ideology is more important than a pragmatic solution. The FDP is also at a disadvantage here.
There will be no general excess profits tax, but the government wants to skim off the “windfall profits” from energy companies. A European solution is being sought for this. However, the coalition does not seem to rate the corresponding chances of success too high. That is why the national solution has already been decided. Accordingly, the possible proceeds should be capped. Profits that are higher are then skimmed off. That’s a viable approach. However, Scholz and Linder remained very vague as to how much this can and should bring to the federal government.
As was to be expected, there should be a follow-up regulation for the 9-euro ticket. The price could be between 49 and 69 euros per month. Ultimately, it will depend on how much money the federal states want to contribute to the 1.5 billion euros provided by the federal government.
dr Hugo Müller-Vogg is a journalist, book author and former editor of the Frankfurter Allgemeine Zeitung (FAZ).
As is well known, the 9-euro ticket did not significantly reduce energy consumption because it was used more for weekend trips. The number of commuters who switched from cars to buses and trains, on the other hand, was manageable. However, Scholz pointed out that the ticket was very popular. Which suggests that the traffic light here is about positive points for voters and less about targeted relief for people with low incomes. There are no income limits here either.
Helping people deal with inflation and higher energy prices is one thing, tinkering with the social security system is another. The SPD and the Greens have managed to include the replacement of Hartz IV with a very unspecific “citizen’s allowance” in the relief package, as well as a major housing benefit reform. One thing can be assumed: more people will get more money, and under easier conditions. The costs for this cannot be included in the 65 billion euros, because nobody can yet say what the reforms will look like.
Speaking of money. According to Lindner, the measures cost the federal government 32 billion euros. The remaining 35 billion are to come from the skimming off of the random profits of the energy companies. Linder emphasizes that neither a supplementary budget nor a move away from the debt brake in 2023 will be necessary for the 32 billion additional expenditures in 2022.
From the finance minister’s point of view, the whole operation exudes “solidarity and solidity”. But how solid is financing if no one can know what the windfall profits of the energy companies will be in the near future? In addition, it is completely unclear what amount of electricity each household is entitled to at a reduced price.
The government – and thus also the finance minister – is on shaky ground. A remark by Lindner that one could always “react appropriately to the situation” was revealing. He pointed out that the government had suspended the debt brake again in 2022 after the Russian attack on Ukraine. That didn’t sound like a commitment to sticking to the debt brake in 2023.
We are undoubtedly in difficult times. Many people are dependent on state aid in order to be able to earn a living. Most of the population – the middle-income workers – are also stretching for the ceiling. There’s not much in the package for them. The gas price explosion hits them with full force, as does the inflationary development of many other prices. On the other hand, those who can make ends meet very well without any support are also partially beneficiaries of the relief.
65 billion euros – that is indeed massive. However, the effect is limited because the funds are not distributed very precisely, but rather too generously. In addition, the whole thing is linked to a permanent expansion of the already generous social system. Even if inflation were to weaken again in 2024, the new social benefits will remain. And the fact that it just can’t be financed on a solid basis.