Financing unclear: Greens, SPD and FDP criticize Unions

The Union's program for the Bundestag election in September has met with unanimous criticism from political competition, while economists see light and shadow.

"Tax gifts for top incomes, no concept for the economy, work and social security," criticized Federal Labor Minister Hubertus Heil (SPD) on Monday via Twitter.

"The Laschet CDU program has earned a new title: 'Back without a future'."

Even the Greens - the Union's fiercest rival according to surveys - are not giving up their plans. Her Chancellor candidate Annalena Baerbock accuses the Union of not being able to finance many election promises and of not being brave enough. The CDU / CSU program was built on soft sand, said the co-leader of the Greens on Monday in Berlin. Above all, tax breaks for some wealthy people are the wrong way to go. That would lead to a massive drop in public investment after the coronavirus pandemic. “We have to invest courageously now. That costs money. ”Politicians have to be honest here. The Union's electoral program, however, tends to follow the motto “Close your eyes and through”, it is a “go ahead” program. Climate protection must be the basis for economic activity and be cushioned socially.The choice will therefore be a directional decision. The budget spokesman in the Bundestag, Sven-Christian Kindler, also said that the large investments in the future could not be financed with the program: "You have to be able to afford to vote for a union."

The budgetary spokesman for the FDP parliamentary group Otto Fricke describes Union projects as irresponsible and contradictory.

"The CDU / CSU are trying again on the principle that nobody seems to have more money for everyone," said Fricke.

"But responsible budget policy also means not increasing the willingness to receive unpleasant news, such as the cancellation of subsidies or state benefits."

Model failed?

The President of the German Institute for Economic Research (DIW), Marcel Fratzscher, is taking a hard line against the Union's plans. "The basic idea of ​​the CDU / CSU economic program is the redistribution from the bottom up in the hope that top earners and companies invest this additional money wisely so that innovation is promoted, good jobs are secured and progress is made with climate change," said Fratzscher. "However, the last 30 years of neoliberalism have shown all over the world that this model has failed." In Germany, too, companies and top earners have been given significant financial relief over the past 30 years, but private investments have remained weak and the important challenges have remained unresolved. In addition, the program cannot be financed,"Because it provides relief for top earners and companies by 50 billion euros annually, but categorically excludes tax increases".

Ifo President Clemens Fuest, on the other hand, welcomed the fact that the election manifesto focused on improving the tax framework and thus on growth. It is a "clear alternative to the wealth tax of the SPD, the Greens and the Left," tweeted the head of the Munich research institute. However, the Union should recognize that growth is a priority over deficit reduction.

The President of the Institute for the World Economy (IfW), Gabriel Felbermayr, sees positive approaches. "I also believe that the time is not right now for tax increases," said the economist. "The lowering of corporate taxation to 25 percent and the abolition of the solos for everyone seem to me to be less urgent than before the crisis, also because the international tax competition could become smaller because of the minimum taxation." The recognizable will to modernize the German administration is good. "That has been the bottleneck in recent years and a real threat to future viability," said Felbermayr. The commitment to the CO2 price and emissions trading is also encouraging. Overall, however, it is very unclear how the Union intends to finance its projects.

Jens Südekum, who teaches economics at Heinrich Heine University in Düsseldorf, agrees.

"In addition to the promised tax cuts, there are many other promises in the program for financially effective spending," he said.

“It is unclear how all of this will be financed.

With a quick return to the debt brake that doesn't go well. ”He expects the Union to be open to creative financing solutions such as independent investment funds after the election.

This is the only way to bring the many spending needs and the appearance of the black zero in the core budget together.

DIW boss Fratzscher also sees positive approaches in the program draft.

The introduction of a generation pension and family splitting, for example, is "economically sensible".