Germany's Federal Constitutional Court ruled that reallocating €60 billion of unused pandemic-era debt to a climate and transformation fund was unconstitutional, impacting the government's budget plans https://www.dw.com/en/germanys-budget-woes-a-threat-to-the-government/a-67487625.
Following the court ruling, the German government must find alternative means to fill the €60 billion budget gap without reallocating the specified debt. The purpose of the question is to predict which strategies the government will adopt to address this financial shortfall.
This market will resolve positively for any selected option if the German government implements the corresponding measure during the revision of the budget (at least partially), specifically in response to the budget gap created by the Constitutional Court's ruling. However, if the government disbands or a new government is formed before the budget issue is resolved, the market will resolve as N/A. The implementation of any measure, whether tax increases, budget cuts, subsidy eliminations, or others, must be clearly initiated or enacted as part of the budget revision process. These do not include measures that were already implemented before this question was announced.
I will wait until the members of the German federal parliament (Bundestag) voted to implement an option for resolution.
This is my first question on Manifold, so feel free to message me with advice/issues. I will not bet on this market.
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I resolved a few options based on today’s confirmed law for 2024’s budget:
https://www.bundestag.de/dokumente/textarchiv/2024/kw05-de-haushaltsgesetz-2024-dritte-lesung-977666
https://dserver.bundestag.de/btd/20/099/2009999.pdf
- The "Bürgergeldbonus" will be abolished, thus we have a budget cut in social spending.
- Subsidies for agricultural and forestry operations are progressively reduced. At the same time, taxes for flights with certain destinations are increased. Summing to more than 1 Billion Euros for the upcoming years. This resolves "Any substantial reduction of environmentally harmful subsidies (> €1 Billion)"
As mentioned earlier:
- Many pro-climate programs are not prolonged (https://www.bmwk.de/Redaktion/DE/Meldung/2023/20231221-haushalt-einigung-ktf-2024.html) resolving "simply do less pro-climate spending".
Please let me know, if you disagree with any of the resolutions, or would have handled them differently.
@kiudee Thanks! I agree with all of your resolutions. It seems to me that the remaining ones could also be resolved, given that the budget law has now conclusively decided how the gap in the 2024 budget is filled.
@AmadeoBordiga (In particular, while the coalition has stated that it leaves open whether a Notlage might later be declared in response to potential funding needs for Ukraine, it has made clear that no Notlage is declared in response to the budget gap created by the constitutional court’s decision.)
@AmadeoBordiga Very good point. In the future it also will be increasingly more difficult to gauge, whether a specific measure was used to fund the climate transformation fund.
In this announcement
https://www.bmwk.de/Redaktion/DE/Meldung/2023/20231221-haushalt-einigung-ktf-2024.html
they say
"In 2024 kann durch die genannten Maßnahmen auf einen Bundeszuschuss an den KTF verzichtet werden, für 2025 und 2026 sind Zuschüsse eingeplant." (translation: "In 2024, the mentioned measures will make it possible to forego a federal subsidy to the KTF, while subsidies are planned for 2025 and 2026.")
but it is unclear if we can assign any of the measures above, in case they are implemented as part of an overhauled budget anyway. Thoughts?
@kiudee The December budget deal was cut specifically in response to the ruling (which created the need for action in the first place). So in my view, any measures that were part of that deal should be resolved positively when they are passed, and any measures that haven’t been taken should be resolved negatively.
@AmadeoBordiga Regarding the flight tax: “Die Erhöhung der Luftverkehrssteuer ist Teil des Maßnahmenpakets der Bundesregierung, um nach dem Urteil des Bundesverfassungsgerichts Milliardenlöcher im Haushalt zu stopfen.”
@LudwigBald I don’t know whether it makes a difference in practice, but the resolution criteria state that “This market will resolve positively for any selected option if the German government implements the corresponding measure during the revision of the budget (at least partially), specifically in response to the budget gap created by the Constitutional Court's ruling.” In my interpretation, this means that the change has to occur both (1) during the budget revision process (which is now over, so not all of 2024), and (2) specifically in response to the budget gap.
Judging from this official announcement (German):
https://www.bmwk.de/Redaktion/DE/Meldung/2023/20231221-haushalt-einigung-ktf-2024.html
this should resolve positively, since many programs have been reduced or cancelled. What does the community think?
https://finance.yahoo.com/news/germany-dropped-plans-kerosene-tax-154643441.html
"The German government has ditched plans for a kerosene tax on domestic flights as part of next year's budget, a spokesperson for the finance ministry said on Tuesday. Instead, the government plans to make up for those planned revenues by changing aviation tax, the spokesperson added."
The law officially enacting the state of emergency for 2023 has been passed in the Bundestag today:
https://www.bundestag.de/dokumente/textarchiv/2023/kw50-de-nachtragshaushalt-980612 (German)
As was expected, it reached the necessary majority.
@AmadeoBordiga I resolved it YES.
Source for this:
https://www.tagesschau.de/inland/innenpolitik/bundestag-co2-preis-schuldenbremse-100.html (German)
https://www.reuters.com/markets/europe/german-government-agrees-2024-budget-government-sources-2023-12-13/
"The budget compromise also foresees new levies on kerosene fuel for domestic flights and on the production of environmentally harmful plastic, as well as an increase in the CO2 surcharge on fuel, heating oil and gas - in a concession by the business-friendly FDP, which had ruled out tax hikes."
https://www.dw.com/en/germanys-coalition-government-agrees-on-2024-budget/a-67707922
Quote:
- "Scholz said the government will reinstate the debt brake in 2024."
- "[...] the climate and transformation fund will remain a key instrument for the climate-friendly transformation of the German economy. But the fund will be cut by €12 billion for 2024."
- "[...] end financial incentives to buy electric cars sooner than previously planned"
- "[...] subsidies for the expansion of solar power will be cut."
- "Deutsche Bahn, the state-owned national rail operator, should benefit from privatization proceeds. Deutsche Bahn wants to sell its subsidiary Schenker."
- "[...] the government will slash climate-damaging subsidies to the tune of €3 billion."
https://www.dw.com/en/germanys-cabinet-agrees-to-lift-debt-brake-again-for-2023/a-67564655
"The supplementary budget included a credit of around €45 billion ($49 billion) that is intended to cover funds that have already been spent in 2023, for example for an energy price cap and to support flood victims. The budget must still be approved by the German Bundestag."
https://www.reuters.com/world/europe/german-government-agree-budget-fixes-way-out-crisis-2023-11-27/
“Summary
Government to suspend debt brake again [now for 2023]
Will use 2022 energy crunch as justification - spokesperson
2024 budget may not be finalised until end January
FDP opposes suspending debt brake again in 2024
Future of energy price caps in doubt”
https://www.dw.com/en/germany-to-suspend-debt-brake-present-revised-2023-budget/a-67536063
“The German government plans to draw up a supplementary budget for 2023 after a Constitutional Court ruling threw spending plans into disarray, Finance Minister Christian Lindner said in Berlin on Thursday.
A decision to suspend a so-called debt brake will allow the government to significantly increase new borrowing this year. Lindner intends to present a supplementary budget for the current year next week on Wednesday.”
No details yet, but this supplementary budget might be used in conjunction with a "Notlage"/state of emergency to circumvent the debt brake.
@kiudee They want to declare a Notlage: https://www.tagesschau.de/inland/innenpolitik/schuldenbremse-lindner-100.html
Will you require the Bundestag to agree for resolution?