Parliament debates debt brake reform – DW – 03/13/2025

Heidi Reichinnek, the co-leader of the socialist Left Party, said voting for the new financial package with the “old” Bundestag is “deeply undemocratic.”

The CDU/CSU and the SPD are seeking to pass a constitutional reform to loosen the debt brake before the “new” parliament elected in last month’s elections begins work on March 25.

According to Reichinnek, the SPD and CDU/CSU are worried they wouldn’t get the required two-thirds majority in the newly-elected parliament, also due to the Left Party’s increased number of seats.

Reichinnek said her party would not back the package, which would allow for increased defense spending, labeling it “a blank cheque for armament.”

Outgoing leader of the business-focused Free Democrats (FDP) Christian Lindner has criticized the plan to relax the debt brake to allow more spending on defense.

Speaking before the Bundestag, he said the financial package proposed by the CDU/CSU and SPD would “loosen the debt brake to the point of ineffectiveness” and place a significant financial burden on future generations.

“This does not strengthen our security, but on the contrary provokes new risks,” said Lindner.

He also criticized likely future chancellor, CDU leader Friedrich Merz, accusing him of sacrificing his convictions: “You here in the front row: who are you? And what have you done with Friedrich Merz?”

Lindner’s party will not be part of the next parliament after it failed to cross the 5% hurdle in the February elections.

The premier of the northeastern state of Mecklenburg-Western Pomerania, Manuela Schwesig of the Social Democratic Party (SPD), has appealed to Germany’s Greens to get behind the financial package proposed by the CDU/CSU and her party.

“Our economy needs investment,” she said, adding that the solution is a reform of the debt brake.

Schwesig said it’s time for Germany’s democratic parties to leave past emotions behind and “come together.”

Germany’s federal states are supportive of the reform, according to Schwesig.

In the Bundestag, the Greens have called for further changes to the financial package proposed by the CDU/CSU and SPD, and once again made their approval dependent on these changes.

The party’s parliamentary group leader Katharina Dröge told CDU leader Friedrich Merz that if he was wondering why the negotiations with the Greens were going the way they were, she would answer: “Because we are not relying on your word.”

She demanded that the resolution on the planned special infrastructure fund should include a clause stating that the investments financed with this money must actually be “additional.” Otherwise, Dröge said, there is a danger that the loan money will end up being used for tax cuts or for other projects.

Second, Dröge demanded that the votes on the planned exemptions for defense spending from the debt brake and on the special fund be kept separate. “There is no factual connection between them,” the Green politician argued. The newly elected Bundestag could also vote on the special fund at a later date, she added.

The German Bundestag is packed today, with journalists attending in numbers seen only during key political moments.

And an important moment it is. The parties set to form Germany’s next government coalition, the conservative CDU/CSU and the Social Democrats, are seeking to do something unprecedented in postwar Germany: To pass a constitutional reform with a majority only possible with the “old” Bundestag, elected in 2021, whose makeup has now been changed by the recent elections and that will be swapped out by the “new” Bundestag on March 25.

To reform the limit on government borrowing enshrined in Germany’s constitution, the CDU and SPD need the support of the Greens. So far, they have failed to convince the environmentalist party to play along. In a strong speech here in the Bundestag’s plenary, the Greens’ parliamentary group leader, Katharina Dröge, said the offers made so far are not enough to convince the Greens to support the reform plans.

The final vote is planned for Tuesday, March 18th. We can expect talks between the parties to continue into the weekend, as they seek to find an agreement on how to support Germany’s defense in these tense geopolitical times.

During the debate in the Bundestag, CDU leader and would-be Chancellor Friedrich Merz tried to win the support of the Greens for his proposed changes to the debt brake by offering to expand the scope of defense spending to include civil defense and intelligence spending.

“We have to do something to improve our defensive capabilities, and quickly,” he told legislators, justifying the need to act now, rather than wait for the new Bundestag to find its feet. “The word deterrence must rapidly be given a credible military foundation.”

Referring to the United States’ deteriorating ties with Ukraine and its European allies, Merz said “we could be standing before a decision with deep consequences for our country’s history.”

He also said that investments for climate protection had been added to the wording of the special infrastructure fund and that it should also be possible to transfer up to €50 billion ($54 billion) from the planned special fund to the climate transformation fund. 

His compromises to the Greens should be sufficient, Merz argued. “What more do you want from us in so short a time?,” he asked the party’s legislators.

Meanwhile, SPD parliamentary leader Lars Klingbeil also urged MPs to back the debt reform: “When history knocks at our door, then we must open it, we don’t know if we will have a second chance.”

The center-left Social Democratic Party (SPD) and the center-right Christian Democratic Union and Christian Social Union (CDU/CSU) — currently trying to form the new German government — want to take out unprecedented amounts of new debt.

To do this, they have to change Basic Law, Germany’s constitution, which can only be achieved with the approval of two-thirds of the members of the Bundestag, Germany’s lower house of parliament.

Together with the Greens, the SPD and CDU/CSU could pass the constitutional changes in the outgoing Bundestag.

Whether this will happen remains to be seen. The Greens are still part of the caretaker government but are already preparing for their future role in the opposition after their defeat in the February elections.

The Greens have said they are not inclined to help their political opponents without anything in return. Especially as the CDU/CSU and their candidate for chancellor, Friedrich Merz, had categorically ruled out a reform of the debt brake, while the Greens, SPD and the Left Party have long been demanding just that.

Read more here: Germany’s likely new government makes a risky gambit

The Green Party will not support CDU leader Friedrich Merz’s proposals for sweeping debt reforms and current talks do not give cause for optimism about a compromise, senior Greens official Katharina Dröge told reporters.

In the talks with the CDU/CSU and the SPD, there is no rapprochement that would allow a timely agreement to be promised, Dröge said.

She once again criticized the fact that no money had been earmarked for climate protection in the extra pot for infrastructure.

“Climate protection is the great challenge of our time,” Dröge said. “Here, too, we have not yet seen sufficient willingness to act together.”

As Germany’s lower house of parliament prepares to debate debt reform, questions are being raised about whether the outgoing Bundestag has the authority to make such decisions.

The Left Party and the far-right Alternative for Germany (AfD) have filed lawsuits with the Constitutional Court to block the special sessions this week and next. They argue that such moves are a violation of the rights of the new members of parliament.

Following elections on February 23, which saw the conservatives come out on top, the old Bundestag continues its work until the new parliament convenes for the first time on March 25.

The debt reform requires a two-thirds majority to change Germany’s constitution. But electoral gains by the AfD and The Left last month mean it could be much harder to win support once newly elected lawmakers take their seats.

Instead, the CDU/CSU, led by Friedrich Merz, and the SPD are hoping to push the plan through the outgoing parliament with the help of the Greens. Until the new Bundestag convenes, the old parliament is considered to have a quorum and the authority to make decisions.

There has been no progress in talks to massively increase Germany’s government borrowing by reforming the country’s debt limits, a Green Party official told RTL/ntv after further negotiations with the conservative CDU/CSU alliance.

Britta Hasselmann warned of “serious gaps and mistakes in the conception” of the plans of CDU leader Friedrich Merz and his likely coalition partners, the Social Democrats (SPD).

Changing the debt rules requires a constitutional amendment, which requires a two-thirds majority in the Bundestag, Germany’s lower house of parliament.

For that, the conservatives and Social Democrats need the support of the Greens, who have so far refused to back the whole package.

In addition to raising the debt ceiling, the deal proposed by the CDU/CSU and SPD would create a new €500 billion ($544 billion) special fund for infrastructure investment to be spent over the next decade. The states would get €100 billion of that.

The financial package is not a done deal, however, as Merz’s conservatives and likely future coalition partners, the center-left Social Democrats, need to win over the Greens to secure the two-thirds majority needed to change the constitution.

But on Wednesday, outgoing Vice Chancellor Robert Habeck of the Greens denounced the infrastructure fund as a farce masking a collection of CDU/CSU and SPD tax giveaways and election promises.

Germany’s conservative conservative alliance of the Christian Democrats (CDU) and their Bavarian sister party, the Christian Social Union (CSU), is set to begin coalition talks with the center-left Social Democrats (SPD) of outgoing Chancellor Olaf Scholz.

Following its victory in February’s parliamentary elections, the conservative bloc led by Friedrich Merz has agreed on a number of key points in exploratory talks with the SPD.

Now, 16 working groups, each consisting of 16 representatives of the CDU, CSU and SPD, will spend 10 days negotiating the details of a joint government program. Their work would then be handed over to a negotiating group that would include the leaders of each party.

A draft coalition agreement would then be submitted to the three parties for approval. The SPD has already said it wants to consult its members on a draft agreement. Merz, who is likely to be the next chancellor, has said he plans to have the new government in place by Easter in mid-April.

In Germany, the federal government and the 16 states are obliged to balance their books and are practically prohibited from taking out extra loans. No other G7 country has such strict limits on new borrowing.

The rules are enshrined in the Basic Law, Germany’s constitution, and apply — with minor differences — both at the federal level and in the 16 states, or “Länder” in German.

The requirement was introduced during the 2009 global financial crisis. The debt brake became legally binding for the federal government in 2016 and for the states in 2020.

However, the debt brake is not absolute, at least not for the federal government. While an outright ban on debt applies to the federal states, the federal government is permitted net borrowing amounting to a maximum of 0.35% of economic output.

The Basic Law also allows the debt brake to be suspended “for natural disasters or unusual emergencies beyond governmental control and substantially harmful to the state’s financial capacity.”

Read more here: What is Germany’s debt brake?

The lower chamber of Germany’s outgoing parliament, the Bundestag, will convene in a special session to discuss reforming the country’s constitutionally enshrined government borrowing limits, known as the “debt brake.”

Reform would ease the 2008 global financial crisis-imposed measures, seen by many as an outdated financial stranglehold. The move would allow Germany to spend heavily on defense and infrastructure.

The reform is being pushed by the conservative CDU/CSU bloc, led by incoming Chancellor Friedrich Merz, and the Social Democrats, who are in preliminary talks to form a coalition after the February elections.

However, the move is controversial as some parties, including the far-right AfD, have accused the major political parties of pushing through new legislation before the newly elected parliament convenes.