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So the German ‘ #debtbrake’ reform debate is over, 12 hours after it had started with the op-ed of Merkel’s chief of staff, Helge #Braun? Not so fast. /thread
#Braun gave a sober, CDU-minded assessment: he didn’t question the #debt brake, but argued that severe crises like this one call for a longer transition period to return to the rules. /2
He is right, of course. If you want your economy to make a full #recovery, don’t tighten early. He was being realistic. (That the German debt brake is economically flawed overall is a different matter.) /3
The op-ed gave the new party head Armin #Laschet the opportunity to take charge as a leader, tell #Braun off, commit to fiscal orthodoxy. So that is a win for the CDU internally. But what about reforming the debt brake? /4
#Braun’s op-ed is quite useful. 1. Not in my wildest dreams would I have imagined a senior CDU minister to suggest in an op-ed that the constitutional debt brake could be amended. That line is crossed. /5
2. The debt debate is now open also on the conservative flank. That’s because they know that the fiscal rule creates an almost inevitable discussion about #distributional aspects. /6
Because if the #CDU says “no to more debt”, what’s it gonna be? Pension cuts? Not on your life. The welfare state is already quite slim. Higher #taxes on the rich (poorer workers are already taxed highly)? /7
#Braun will thus be proven right by events, having opened the door to adjustments of the constitutional #debt brake in the process. That’s where the #Greens come in. /8
The #Greens are bold enough to demand a reform of the #debt brake, to make it more sensitive to the debt level (less binding the lower debt is) and safeguard investment in a golden-rule-type framework. /9
In coalition talks after September’s election, the #Greens may well push for such a reform, knowing full well that most Germans are behind a boost to investment, even if it’s debt funded. The CDU may well fold. /10
(One famous political phrase is: "What do I care about what I said yesterday?" by Adenauer. Laschet, Rheinländer like Adenauer, may well have a similar view, and Laschet is no fiscal hawk.) /11
The CDU may thus well agree, overstepping its previous “red line”, because the alternative is worse. What #Braun did was no accident, but to prepare the party’s voters for mild changes to the debt brake. /end
