Home Featured Olaf Scholz on budget crisis: No cuts to German welfare state
Olaf Scholz on budget crisis: No cuts to German welfare state

Olaf Scholz on budget crisis: No cuts to German welfare state

by host

BERLIN — German Chancellor Olaf Scholz on Saturday rejected his fiscally conservative coalition partners who are demanding cuts to social benefits, as the government tries to plug a €60 billion hole in its budget.

“For me, it is very clear: There will be no dismantling of the welfare state in a situation like this,” Scholz said at the Social Democratic Party (SPD) convention in Berlin, during an eagerly awaited speech after weeks of silence on the subject.

Scholz’s vow brought relief to his party colleagues, but poses a challenge to coalition partners from the Free Democratic Party, who have repeatedly called for the budget crisis to be resolved by cutting social benefits. Most recently, FDP deputy leader Johannes Vogel described the German welfare state as a “thicket” in an interview, which he said creates injustice, particularly in the area of family-related benefits.

But in a 45-minute speech, Scholz gave little insight into how the government would proceed. The budget crisis would be a “very difficult, but not unsolvable task,” he said.

Times are tough for Scholz.

On the two-year anniversary of his three-way so-called traffic light coalition taking office, Scholz received an unwelcome gift from pollsters: An approval rating of just 20 percent, the worst result ever recorded for a chancellor by Germany’s public television ARD. 

The budget crisis, triggered by a bombshell ruling from the German Constitutional Court in November, has likely contributed to Scholz’s tanking ratings. The court ruled that a government plan to repurpose €60 billion left over from an emergency COVID-19 fund to finance the country’s green agenda was unconstitutional.

Scholz’s speech on Saturday, in which he also invoked Germany’s support for Ukraine as it fights against Russian President Vladimir Putin’s invasion, was received by almost five minutes of applause. He said nothing during the speech about a reform of the debt brake, which constitutionally limits Germany’s new borrowing. 

On Friday, the SPD delegates approved a reform of the debt brake in order to extricate the government from the budget crisis, but such a reform would be a deeply controversial topic within the governing coalition. 

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