A German taxpaying association has expressed concerns over a planned multi-billion-euro financial package by the Union and SPD, warning of an uncontrollable debt policy. According to the association’s president, Reiner Holznagel, the government’s approach is irresponsible and self-serving, with the brakes on fiscal policy lifted, allowing politicians to do as they please.
The planned package aims to suspend the debt brake, a constitutional provision, to fund a massive military buildup, with billions of euros flowing to defense contractors like Rheinmetall, Hensoldt and Thyssenkrupp, at the expense of future generations. Additionally, a special fund, dubbed a “Sondervermögen” worth 500 billion euros, is to be created for infrastructure projects, effectively adding to the national debt.
Holznagel predicts that the special fund will lead to unnecessary projects on the state and local level, driven by the allure of federal subsidies. He likens the situation to a state-run self-service store, where politicians will take advantage of the unlimited credit to fund projects they may not need.
The unlimited credit for the military, Holznagel says, also raises concerns about accountability to taxpayers, as there will be no need to question the sense of military planning. The structures being created have a blank check identity, as the government has abandoned the principle of fiscal responsibility.
The future government, under Friedrich Merz, has opted for credits over necessary reforms and savings, according to Holznagel, who criticizes the approach as a lack of pressure to address pressing issues, such as the pension system, local finances, migration and the basic income. Instead, politicians have taken a relaxed attitude, saying “it will all work out.”
Furthermore, the EU is likely to slip into a new debt spiral, as the plans to exempt defense spending from the deficit limits will not be met with any deficit procedures on the European level, according to Holznagel.