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Christian Lindner and Markus Söder: How much leeway is there when it comes to citizens' money?

Photo: IMAGO / Bernd Elmenthaler

The Bundesrat could soon deal with the citizens' money: With an initiative in the state chamber, Bavaria's Prime Minister Markus Söder (CSU) wants to encourage a revision of the citizens' money. "The traffic light must postpone the increase planned for January by one year and start again completely anew," the CSU leader told the "Stern". The benefit must be separated from flight and asylum. It takes more motivation to go to work.«

The overall level is too high and it sets wrong incentives, the Prime Minister criticized. Söder also called for a stop to citizens' money payments to newly arriving refugees from Ukraine. "It would not be lawful to delete something retroactively. But for all new cases, we have to change course," said the CSU politician. And for everyone else who is new to us, there should be social benefits after five years instead of 18 months."

The traffic light coalition of SPD, Greens and FDP must close funding gaps in the budget for the coming year after a Constitutional Court ruling. Federal Finance Minister Christian Lindner (FDP) had put the gap in the core budget alone at 17 billion euros.

Lindner wants to examine planned increase in citizens' money – but room for manoeuvre is limited

The pressure is on: the coalition must reach an agreement within the next few days if it wants to pass the budget for 2024 before the end of this year. Currently, the talks are mainly taking place in a three-way round with Chancellor Olaf Scholz (SPD), Vice Chancellor Robert Habeck (Greens) and Lindner. There could also be talks this weekend.

In addition to Söder, Lindner also called for savings in social spending to the Funke media group on Saturday. The Finance Minister pointed out that the federal government currently spends 45 percent of its expenditure on the social sector alone. He announced a review of the planned increases in the citizens' allowance. The inflation rate is currently developing much better than was forecast when the standard rate was set for 2024, he said.

Inflation had fallen to 3.2 percent in November – the planned increase in citizens' money from January is still based on inflation of 9.9 percent. "The upcoming review of the gap between wages and benefits will therefore have to look at the adjustment process. Because it always has to make a noticeable difference whether someone works or doesn't work," said Lindner.

The more than five million recipients of citizens' allowance are to receive an average of around twelve percent more money on January 1, 2024 - single people will then receive 563 euros a month, which is 61 euros more than before. This is intended to compensate for the general price increase.

However, it is questionable how much leeway politicians have when it comes to citizens' money: The citizens' allowance is intended to secure the subsistence level of those in need. The amount of the standard rates is based on mechanisms laid down by law. In the past, the Federal Constitutional Court had made it clear that their calculation was at the lower end of what was possible. (Read here where savings could be made in the social sphere – and where not.)

The fact that the standard rates are to rise more than the current general inflation rate can also be explained. For example, a separate inflation rate is determined for calculating the standard rates. This is based on the product groups that are intended for recipients of citizens' benefits: food is strongly represented, for example, which has become particularly expensive at the same time. (Read the full explanation here.)

Bas warns against populism, Esken optimistic

In an interview with the AFP news agency, Bundestag President Bärbel Bas (SPD) criticized the demands for cuts in the citizens' allowance. The citizens' allowance is "linked to the issue of immigration and to the statement that people allegedly no longer want to work," said the Bundestag President. However, she knows many people who cannot work or do not have a work permit. Putting people under general suspicion is a "recipe of the populists".

Despite the differences in the coalition, SPD leader Saskia Esken is optimistic that the federal budget for 2024 can be completed before the end of this year. When it comes to savings, however, the federal government should "focus on the strong shoulders and not on pensioners, children or the unemployed," Esken told the Rheinische Post. The path to the climate-friendly transformation of the economy must also continue to be financed.

SPD leader Lars Klingbeil made it clear that the SPD wants to put the agreed renunciation of tax increases up for discussion. This, in turn, is rejected by the FPD.

Lindner wants to save on development aid and subsidies

Instead, Finance Minister Lindner named international aid as a second area of savings in addition to social welfare: Germany could "happily remain in first place" in terms of development cooperation and international climate finance. But perhaps the gap to second place can be reduced," the FDP politician told the Funke newspapers. German Development Minister Svenja Schulze replied that development cooperation was "not a nice-to-have, but in our German interest". Not investing would be more expensive because problems such as climate change would then hit Germany harder.

Lindner also sees savings opportunities in government subsidy programs – but without naming specific programs. It is still too early to name individual programmes. Otherwise, this would lead to "a run on funding programs in the last few meters."

In fact, companies are already worried about promised subsidies – but money could also be saved on climate-damaging subsidies. This is what the Greens are demanding.

With material from dpa and AFP