Basic food prices have risen by eight percent since April last year. Chancellor Olaf Scholz prefers to talk about war, peace and his rearmament program for the Bundeswehr. Has he forgotten his regular voters?
The question of whether Olaf Scholz is traveling to Kyiv is important to most media and most Germans don’t give a damn. When it comes to rising inflation rates, the situation is exactly the opposite.
The FDP and SPD headquarters did not identify Ukraine policy as an important reason for the defeats in the state elections in North Rhine-Westphalia and Schleswig-Holstein, but rather fears of inflation – and the callousness with which the traffic light coalition ignored them.
He is also silent because for years he has disputed the risk of inflation that was inherent in the policy of flooding money and debt. He wanted “to take away everyone’s concern that we are getting too big a problem with inflation,” said Finance Minister Scholz in June 2021.
Scholz, his ministry and also the ECB published several rosy forecasts before the loss occurred, which were quickly overtaken by reality. Scholz was mostly in good company, in a way a blind man among the blind, which calms him down, but not the general public.
And then the mother of all mistakes happened. And the father’s name is: Scholz. He had a 15 billion relief package put together that brings in 300 euros for every income tax payer – and he forgot millions of his regular voters. Only people with an employment contract and an income tax card benefit from this relief. Students and almost all pensioners went away empty-handed.
Only the tricky benefit. Every pensioner who accounts for just one day as a mini-jobber at the minimum wage of currently 9.82 euros for the care of their children and is thus assessed for income tax, can collect the one-time tax credit of 300 euros. Anyone who maintains a voluntary and therefore cashless relationship with their children, neighbors or club friends will get nothing.
Even workers who benefited from the tax credit are losers. This was the result of a recent study by the DIW yesterday. Because the energy price surge is so massive that even after the state relief, a two percent net burden remains. German employees are currently suffering real wage losses across the board.
So it’s no wonder: in the lower strata of society things are no longer just rumbling, things are seething. The topic of inflation is – even if Scholz does not talk about it – the top topic in the republic.
SPD man Stephan Weil in Lower Saxony knows that it will be difficult for him to win elections in a climate of willful ignorance. The topic is “highly sensitive” and the planned relief is insufficient, he said at the start of his state election campaign. The “high point of the inflation wave” is just around the corner. Many pensioners are “on the battlement”. In Lower Saxony there will be elections in 137 days.
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The new DGB boss shares concern with Weil. The president of the social association VdK Verena Bentele – who represents around two million members – does not want to accept the expropriation of her clientele (and that’s what such a massive wave of inflation means). She calls for an exemption for all citizens from VAT on staple foods.
This reduction from today’s seven percent on bread, butter, milk and other staple foods (caution: it has to be cow’s milk, soy milk is taxed by the state at a full 19 percent) to 0.00 percent would cost the state at least 20 billion euros, but at least work quickly and unbureaucratically with the socially needy.
The fact is: the SPD’s core voters – pensioners, workers and savers – are the clear losers in the inflationary republic of Germany. And the governing SPD – which once had finance ministers such as Helmut Schmidt, Karl Schiller, Manfred Lahnstein and Peer Steinbrück – exuded competence and inspired trust, is left blank.
Your voters are suffering a loss of prosperity – and the numbers show that the SPD is not putting up any effective resistance. The self-confessed cynic Kurt Tucholsky guessed: “National economy is when people wonder why they don’t have any money.”
Gabor Steingart is one of the best-known journalists in the country. He publishes the newsletter The Pioneer Briefing. The podcast of the same name is Germany’s leading daily podcast for politics and business. Since May 2020, Steingart has been working with his editorial staff on the ship “The Pioneer One”. Before founding Media Pioneer, Steingart was, among other things, CEO of the Handelsblatt Media Group. You can subscribe to his free newsletter here.