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According to this article, Germany has to rely on some tricks to circumvent the hard limit mentioned in the Constitution:

Germany is considering setting up independent public agencies that could take on new debt to invest in the country’s flagging economy, without falling foul of strict national spending rules, three people familiar with talks about the plan told Reuters.

The creation of new investment agencies would let Germany take advantage of historically low borrowing costs to spend more on infrastructure and climate protection, over and above debt limits enshrined in the constitution, the sources said.

Germany’s debt brake allows a federal budget deficit of up to 0.35% of gross domestic product (GDP). That’s equivalent to about 12 billion euros ($13.3 billion) a year but once factors such as growth rates have been taken into account, Berlin only has the scope to increase new debt by 5 billion next year.

Setting up a hard limit like this in the Constitution is rather strange since one expects that this value has an economical meaning and should change according to the economical context.

Question: Why does Germany have a static "debt brake" value when a value that can be easily changed seems to make more sense?

  • What does "variable value" mean? – ThisIsNoZaku Feb 6 at 15:13
  • @ThisIsNoZaku - a value that is not constant, but that can be changed rather easy / depend on some factors. I have changed to make it clearer, I hope. – Alexei Feb 6 at 15:18
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    Obviously they believed in the ideology/theory of balanced budgets back then when that was passed. I'm not sure there's any deeper explanation than that, although one could add some historical details. en.wikipedia.org/wiki/Balanced_budget_amendment#Germany – SX welcomes ageist gossip Feb 6 at 15:30
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    I am German and I don't understand it, either. The goal seemed to have been to reduce debt to a point where Germany get's in line with the Maastricht criteria, but the constitution is an odd place for what seems to be a matter of day-to-day business. I agree with @Fizz that this comes down to an item of faith rather than some clever economical reasoning. – Eike Pierstorff Feb 6 at 15:40
  • As far as i know (also a German) it's purely ideology. Most times i hear reasons that sound like "We do it that way because we always did it so, so it has to be good". – miep Feb 6 at 15:43
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Essentially, if the value can be easily changed than there is no brake. If the limit on how much new debt can be taken depends on various external factors like the general economic climate, this means in practical politics that there is no hard limit.

At any given point a government could reason that the current situation warrants taking on new debt in the desired quantities. This stated goal of the debt brake was to prevent this situation and bind the hands of the government to a particular easy to understand limit of new debt. The only way to achieve that is a hard limit.

Whether this is a reasonable goal is totally different question.

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    See the US as an example of where a "flexible" limit doesn't really limit anything. – ThisIsNoZaku Feb 6 at 16:42
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    Budgets are passed with a simple majority. Constitutional changes require a supermajority. So basically a supermajority at one point in time decided that only a future supermajority can change the debt limit. – o.m. Feb 6 at 17:46
  • The OP was asking why they have a fixed value, when they are committed to spending more money in any case (which is why they have to "cheat"). So I don't think this really answers the question. Besides, approving a budget is what a parliament is for, so the idea that a current government tells yet to be elected parliaments how much money they can spend is really weird. – Eike Pierstorff Feb 7 at 9:10

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