May 7, 2021


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Merkel’s coalition bickers over ‘wise man’ leadership and rising debt

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A bitter argument has erupted between partners in Angela Merkel’s coalition over who to appoint as chair of the powerful economic council that advises the government, a sign of rising political tensions ahead of the legislative elections.

The role will remain vacant once Lars Feld steps down from the council of economic experts at the end of the month, after Social Democrat Finance Minister Olaf Scholz blocked the economist’s nomination for a third term, against the will from Merkel’s party, the Christian Democrat. Union.

The argument is a sign of the deep ideological differences between the CDU and the SPD on fiscal policy which are expected to intensify in the run-up to the September Bundestag elections. Feld opposes state involvement in the economy, favors tax cuts and defends the debt brake, rule anchored in the German constitution which caps the public debt.

The brake, which limits Germany’s budget deficit to just 0.35% of gross domestic product, was suspended last year as Berlin increased spending to deal with the economic fallout from the coronavirus pandemic. The government has assumed 130 billion euros of debt in 2020 and plans to take 180 billion euros this year, the highest amount in its post-war history.

CDU wants return to old fiscal rules as soon as possible, while many members of the SPD, and some leading left-wing economists, would like to see the brake reformed to allow for greater investment in public services.

A person close to Scholz said his motivation for blocking Feld, who has served on the panel for the past 10 years and as chairman since March 2020, was to inject “fresh blood” into the body. He said there had only been three cases in its 58-year history where a member had served more than two five-year terms. “It has nothing to do with Feld’s economic views,” he said.

The decision of German Finance Minister Olaf Scholz, left. blocking Lars Feld’s reappointment has caused consternation at the CDU © Hannibal Hanschker / Pool / Reuters

But Feld himself has said he has angered many in the SPD by insisting that Germany quickly return to fiscal orthodoxy after its crown-linked spending madness.

“Some SPD forces want more leeway and want to reform the debt brake,” Feld told German radio. He said the SPD’s “politicization” of the expert council had “weakened its independence”, a trend he “deeply regretted”.

Created in 1963, the expert group is called in Germany the “five wise men”, even though two of its current members are women. It publishes an annual report on the state of the economy and plays a very influential role in shaping German economic policy.

The SPD has reportedly put forward its own candidates for president, including Jens Südekum, professor of economics at the Heinrich Heine University in Düsseldorf, and Marcel Fratzscher, head of the economic think tank DIW, whose views are closer to those of the SPD. , in particular on the debt brake.

The blockade by Scholz of Feld, who teaches economic policy at the University of Freiburg, has caused consternation within the CDU. Armin Laschet, the party leader, described him as “one of the most renowned researchers in the social market economy”.

“In the midst of a pandemic, the SPD Minister of Finance, with arrogance and ignorance, prevents [Feld] to stay on the expert board, ”he tweeted. “Particularly now, in this crisis, expertise would be more important than ever.”

Hans Michelbach, finance spokesman for CDU’s sister party, CSU, said the SPD did not need advisers “but clickers for their policy of returning to tax increases and public debt ”. He added: “Mr Feld opposes this and therefore needs to be swept away.”

Yet Scholz’s decision on Feld was greeted by many in his party. “Lars Feld embodies ideological neoliberalism,” said MP for Cansel Kiziltepe, the party’s finance spokesman.

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