Still as Angela Merkel's Finance Minister, today German Chancellor Olaf Scholz designed the state "bazooka" to relieve the German economy of the consequences of the pandemic. Now Scholz launches a second projectile aimed at mitigating the consequences of inflation and, very especially, of out-of-control energy bill prices. The 13-page document presented today in Berlin by the "traffic light coalition" finally contains each and every one of the measures proposed by each of the three parties that make it up: Social Democrats, Greens and Liberals. The whole, which inevitably incurs several contradictions, makes up a package of 65,000 million euros that no one in the German government has been able to explain for the moment where they are going to come from.
From a kind of tax on excessive profits, which the text refers to as "skimming random profits", to a price cap for the basic electricity bill, going through more child benefits, more housing benefits, payments unique for retirees, students and apprentices and even a successor to the fixed rate ticket for public transport between 49 and 69 euros per month. Scholz injects decompression measures for the pockets of families and companies by land, sea and air. Taxes such as the increase in the price of CO2 are postponed and the taxpayer is relieved by introducing full tax deductibility of pension contributions. The 449 euros of social aid for the long-term unemployed popularly known as "Hartz IV" become 500 euros. Retirees will receive a single payment of 300 euros, students 200 euros. For the heating period until December 2022, there will be a single aid of 415 euros for the beneficiaries of the housing subsidy, which is accessed from a situation of precarious resources.
After that, the allowance will be permanently integrated into the housing allowance (540 euros for two people; for each additional person an additional 100 euros). To relieve families, the child benefit will increase at the beginning of the year by 18 euros per month for the first and second child, from the current 204 euros. The special regulations for short-time benefits will extend beyond September 30, 2022 and, in view of the sharp increase in consumer prices, the federal government is asking companies to pay workers an "inflation premium". ». The state "will make this possible in any case" by not imposing taxes or duties on such payments up to a total of 3,000 euros, Chancellor Scholz clarified, also expressing the hope that "this happens in all areas millions of times throughout Germany. And tax rates are adjusted for inflation. After the Social Democratic Party (SPD) and the Greens tried to reinterpret this fiscal mechanism as an instrument of social policy in recent weeks, it now becomes a structural part of this third aid package since Russia began the invasion of Ukraine .
The fact that the federal government has not been able to specify how much each of the individual measures takes from the total sum of 65,000 million euros suggests that there are still many loose ends to connect. The Finance Minister, the Liberal Christian Lindner (FDP), has indirectly confirmed this by estimating the additional financial requirements for this and next year together at around 32 billion euros. Nor is it clear what the announced interventions in the electricity market will really bring to citizens.
The demand to redistribute extra profits to those electricity producers who don't use expensive gas may be wildly popular, but the fact is that state-mandated price caps, a strand of planned economy whose justification would be desirable, have rarely worked in last. Just think of the rent cap imposed in Berlin, which led to all sorts of evasive mechanisms that ultimately only made life more expensive and precarious for tenants. The German “traffic light coalition” has preferred to deal with the symptoms rather than attack the problem through supply and has not discussed the possible extension of the useful life of the nuclear power plants, whose definitive closure is scheduled for the end of this year.
"We take all these citizens' concerns very seriously", Chancellor Scholz translated the essence of the agreement, "the message that we are trying to get across to the economy, to each of the citizens, is that you do not walk alone, we will not let no one alone." Scholz has also suggested that Germany will try to drag the European partners towards these measures, especially towards the cap on the price of basic electricity consumption. “We will try it first at the European level and, if it does not work, at the national level”, confirmed the leader of The Greens, Omid Nouripour, determined to avoid power cuts for consumers who cannot pay their bills and will modify the setting of prices in the electricity market.