In the end, German Chancellor Olaf Scholz and former Finance Minister Christian Lindner only agreed on one point: their cooperation failed because of the debt brake.
Scholz had wanted to suspend this limit on Berlin’s ability to borrow funds in relation to the country’s economic output, to meet the demands of an ailing economy. But Lindner insisted on keeping it place, referring to the oath of office he swore when he became finance minister in 2021.
Claim: “The chancellor ultimately demanded that I suspend the federal debt brake. I could not agree to this because I would have violated my oath of office,” Lindner declared in a statement on November 6 after he was sacked by Scholz, sparking the collapse of the coalition government of their two parties, along with the Greens.
DW fact check: Misleading
The debt brake was not part of Lindner’s oath of office. When he was sworn in as finance minister on December 8, 2021 in the German Bundestag, the leader of the neoliberal Free Democratic Party (FDP)made the following vow: “I swear that I will dedicate my strength to the welfare of the German people, increase its benefit, avert harm from it, uphold and defend the Basic Law and the laws of the Federation, conscientiously fulfill my duties and do justice to everyone. So help me God.”
The oath of office does not contain any specific obligations to the debt brake. It does, however, reference the Basic Law, the German constitution, which in Article 115 states that “revenues and expenditure shall in principle be balanced without revenues from borrowing” — roughly speaking, that the state may only spend as much money as it takes in.
Aid to Ukraine ‘difficult to justify’
While individual states are subject to an absolute ban on borrowing, the federal government is permitted net borrowing that amounts to a maximum of 0.35% of economic output. For example: The gross domestic product in 2022 amounted to around €3.88 trillion ($4.07 billion), which means that the federal government was allowed to take on around €13 billion in additional debt.
But back to Lindner’s claim that a suspension would have violated his oath of office. “There is room for interpretation here,” said Friedrich Heinemann, professor of public finance at the Leibniz Center for European Economic Research.
“Following the ruling of the Federal Constitutional Court in November 2023, Lindner can argue that aid to Ukraine financed by debt is currently difficult to justify under the Basic Law,” he told DW, referring to a judgment that invalidated a budget act that authorized Berlin to borrow in response to the COVID-19 pandemic. The act did not satisfy constitutional requirements for emergency borrowing, the court said.
The “view that he was coerced into violating the Basic Law is possible,” Heinemann said, which in his interpretation would also be against Lindner’s oath of office.
Budgetary law is Bundestag’s remit
The finance in mister does not directly decide on the suspension of the debt brake. This is the task of the German Bundestag, the lower house of parliament, which exercises budgetary law. Lindner’s task as finance minister would have been to present a draft budget to be voted on by its members.
In 2022, the Bundestag decided to borrow hundreds of billions of euros via the abovementioned budget act by making use of the exception to the debt brake, as it had already done for the 2020 and 2021 financial years, referring to an “extraordinary emergency situation” as a consequence of the COVID-19 pandemic and the war in Ukraine.
In principle, the Basic Law allows the debt brake to be suspended “in the event of natural disasters or unusual emergency situations which are outside of the control of government.”
In the debate over the 2024 budget, Scholz’s center-left Social Democratic Party and the environmentalist Greens called for the declaration of an emergency situation once again due to the consequences of the war in Ukraine and subsequent energy crisis.
Experts consider this to be a difficult argument, however. Stefan Korioth, a financial constitutional law scholar at the University of Munich, told Berlin daily Der Tagesspiegel that such an emergency would have to be a “shock-like event from outside that cannot be controlled and significantly impairs the financial situation of the federal government.”
The consequences of the war in Ukraine could well be used as a justification, “however, the outbreak of the war was some time ago, so as time passes, it becomes increasingly difficult to explain why the German state is under an extraordinary burden right now,” Korioth said.
Conclusion: Scholz urged Lindner to lift the debt brake, but not to directly violate his oath of office. Still, the oath of office is subject to interpretation. It also remains unclear whether such a planned suspension of the debt brake would be overturned again by the Federal Constitutional Court.
This article was originally written in German.
