Germania, grande coalizione WSJ 05-11-14
Schröder vince…
Tesi WSJ:
Schröder ha in realtà vinto, aveva solo bisogno di un nuovo cancelliere come la
CDU Angela Merkel disposta a pagare un alto prezzo per succedergli,
come ha fatto. Il nuovo governo tedesco di grande coalizione si è
accordato su un programma inferiore al minimo comun denominatore, un
misto di keynesianesimo, equilibrismo di bilancio e programmazione
statale vecchio-stile. Lo spazio di manovra della Merkel è molto
limitato, il partner di minoranza ha negoziato come fosse di
maggioranza.
Il programma riunisce il peggio delle idee dei due partiti.
- Respinta
la proposta della flat tax al 25% di Kirchhof, così i tedeschi
perderanno vari sussidi senza avere in cambio tasse minori: anziché un
“capitalismo manchesteriano” avranno un “capitalismo berlinese”; - la
riduzione dell’imposta sulle imprese (dal 25 al 19%) già concordata a
marzo è rinviata al 2008; vengono introdotte invece condizioni fiscali
più favorevoli per le PMI per la detrazione degli ammortamenti. - Anziché
facilitare accordi aziendali in deroga dai contratti di categoria, è
stato prolungato l’apprendistato da 6 mesi a 2 anni. - L’Iva
verrà aumentata di 3 punti, anziché di 2, servirà solo per ¼ a ridurre
il costo del lavoro, i contributi obbligatori contro la disoccupazione,
il resto andrà a sanare il bilancio di Land e governo federale.
WSJ 05-11-14
Schroeder Wins…
Remember
Gerhard Schröder’s strangely jubilant posturing after Germany’s Sept.
18 elections, claiming victory even though his Social Democrats came in
second? Turns out, the departing Chancellor wasn’t suffering from temporal delusion after all — he did really win.
Mr. Schröder didn’t even need a recount or to stuff the ballots to make his claim come true.
All he needed was a designated new Chancellor, the Christian Democrats’
Angela Merkel, who was ready to pay a heavy price to become his
successor.
All he needed was a designated new Chancellor, the Christian Democrats’
Angela Merkel, who was ready to pay a heavy price to become his
successor.
And so she did. Last
Friday, the Christian and Social Democrats agreed to a coalition treaty
— a detailed and binding wedding contract that will guide this
government throughout its term in office. On
economics, the treaty offers up a policy mix of Keynesian pump-priming,
tax hikes, obsessive budget balancing and old-style state planning that
is more "red," in hue and substance, than even the previous red-green
government.
Friday, the Christian and Social Democrats agreed to a coalition treaty
— a detailed and binding wedding contract that will guide this
government throughout its term in office. On
economics, the treaty offers up a policy mix of Keynesian pump-priming,
tax hikes, obsessive budget balancing and old-style state planning that
is more "red," in hue and substance, than even the previous red-green
government.
Rather than just a
coalition of the lowest common denominator, the next German government
in fact looks destined to be even lower. It manages to combine the
worst ideas from both parties. Take the value added tax (VAT)
for example. Before the election, Ms. Merkel advocated raising it to
lower statutory unemployment insurance payments for workers and
employers. The Social Democrats opposed the idea, saying it would
dampen consumer demand.
What was the outcome? Instead
of raising VAT by just two percentage points, as the Christian
Democrats wanted, the new government will raise it by three points to
19%. But the Social Democrats have succeeded in making
sure that more of the proceeds will be used to reduce the deficit than
to lower non-wage labor costs.
of raising VAT by just two percentage points, as the Christian
Democrats wanted, the new government will raise it by three points to
19%. But the Social Democrats have succeeded in making
sure that more of the proceeds will be used to reduce the deficit than
to lower non-wage labor costs.
It gets worse. The Social Democrats pushed through an all-time favorite among left-wing populists: high
marginal tax rates. The top rate for single households earning more
than €250,000 (for couples the threshold is €500,000) will rise to 45%
from 42%. Even the optimists among the Social Democrats don’t believe
that it will "generate" much revenue but milking the rich apparently is
always good propaganda. Most likely, though, it will drive out
many of the country’s most talented and productive people, reducing
growth and tax revenues along the way. Instead of "social justice,"
Germany will get the poetic variant.
marginal tax rates. The top rate for single households earning more
than €250,000 (for couples the threshold is €500,000) will rise to 45%
from 42%. Even the optimists among the Social Democrats don’t believe
that it will "generate" much revenue but milking the rich apparently is
always good propaganda. Most likely, though, it will drive out
many of the country’s most talented and productive people, reducing
growth and tax revenues along the way. Instead of "social justice,"
Germany will get the poetic variant.
The
whole government program is myopically focused on balancing the budget
— actually to reduce the deficit to below 3% as required by the euro
zone budget rules. But the emphasis is more on opening new revenue sources than cutting spending. What’s more, a balanced budget is not an end it itself — it has yet to produce a single job. It is Germany’s unwieldy welfare state, restrictive labor market and confiscatory tax code that have produced years of anemic growth, 11.6% unemployment and rising national debt. But those real problems are barely addressed.
whole government program is myopically focused on balancing the budget
— actually to reduce the deficit to below 3% as required by the euro
zone budget rules. But the emphasis is more on opening new revenue sources than cutting spending. What’s more, a balanced budget is not an end it itself — it has yet to produce a single job. It is Germany’s unwieldy welfare state, restrictive labor market and confiscatory tax code that have produced years of anemic growth, 11.6% unemployment and rising national debt. But those real problems are barely addressed.
To make matters even more confused, the balanced budget orthodoxy is contradicted with a good dose of traditional demand-side policy. The government wants to spend an additional €25 billion over the next several years to "shape" economic policy, as they like to say in Germany, improving such things as transport infrastructure and R&D. To finance these plans it wants to sell some of the Bundesbank’s gold reserves. Talk about easy money.
All this muddled policy means the
government will probably still have to take on another €40 billion in
new debt next year and the deficit isn’t scheduled to fall below 3% of
GDP until 2007.
government will probably still have to take on another €40 billion in
new debt next year and the deficit isn’t scheduled to fall below 3% of
GDP until 2007.
Ms. Merkel’s
campaign push for a leaner state, less red tape and more individual
responsibility are missing from her governing agenda. Even where the
new government has identified a problem correctly, such as Germany’s
insufficient spending on scientific research, it resorts to the typical corporatist remedy of pouring more government money on it.
campaign push for a leaner state, less red tape and more individual
responsibility are missing from her governing agenda. Even where the
new government has identified a problem correctly, such as Germany’s
insufficient spending on scientific research, it resorts to the typical corporatist remedy of pouring more government money on it.
And
even where the new government plans to cut tax exemptions and
subsidies, it does so in a non-systematic fashion without bringing
about a more transparent tax code. What a contrast to Ms.
Merkel’s shadow finance minister during the election campaign. Paul
Kirchhof advocated a 25% flat tax in return for scrapping all tax
loopholes. This was denounced as "Manchester Capitalism" — a
libel that probably contributed to the CDU’s disappointing election
results. Now, Germans will lose many of the same subsides anyway but without getting lower tax rates in return. Call it "Berlin Capitalism."
even where the new government plans to cut tax exemptions and
subsidies, it does so in a non-systematic fashion without bringing
about a more transparent tax code. What a contrast to Ms.
Merkel’s shadow finance minister during the election campaign. Paul
Kirchhof advocated a 25% flat tax in return for scrapping all tax
loopholes. This was denounced as "Manchester Capitalism" — a
libel that probably contributed to the CDU’s disappointing election
results. Now, Germans will lose many of the same subsides anyway but without getting lower tax rates in return. Call it "Berlin Capitalism."
As disappointing as the government’s future policy looks destined to be for anyone who hoped for real change in Germany, those measures that the "Grand Coalition" decided to postpone or shelve altogether are equally telling. Back
in spring, both parties agreed to cut the federal corporate tax rate to
19% from 25%. The new government will supposedly address this issue, as
well as an income tax reform — but only in 2008! In the meantime,
companies will be offered more favorable terms for asset depreciation
— further complicating the tax system. International investors are
much easier to impress with competitive tax rates than complicated
lectures from accountants trying to explain the country’s latest tax
loophole.
in spring, both parties agreed to cut the federal corporate tax rate to
19% from 25%. The new government will supposedly address this issue, as
well as an income tax reform — but only in 2008! In the meantime,
companies will be offered more favorable terms for asset depreciation
— further complicating the tax system. International investors are
much easier to impress with competitive tax rates than complicated
lectures from accountants trying to explain the country’s latest tax
loophole.
The Christian Democrat plans
to make it easier for individual firms and employees to change the
terms of the country’s collective bargain agreements have been scrapped
altogether. The only bit of labor reform the
Grand Coalition agreed on is to extend the probation period to two
years from the current six months. Effectively abolishing Germany’s
strict labor protection for new hires in the first 24 months is a
modest step in the right direction — but not more than that.
to make it easier for individual firms and employees to change the
terms of the country’s collective bargain agreements have been scrapped
altogether. The only bit of labor reform the
Grand Coalition agreed on is to extend the probation period to two
years from the current six months. Effectively abolishing Germany’s
strict labor protection for new hires in the first 24 months is a
modest step in the right direction — but not more than that.
Once safely ensconced in the Chancellory, Ms. Merkel can try to revive her campaign ideas. But
her room for maneuver is very limited in a coalition where the junior
partner acted like the stronger party in the coalition talks. She must know that her government can fall at any hint of breach of contract.
her room for maneuver is very limited in a coalition where the junior
partner acted like the stronger party in the coalition talks. She must know that her government can fall at any hint of breach of contract.
If
all parties approve the coalition treaty at conferences in the coming
days, Ms. Merkel is destined to make history on Nov. 22 by becoming the
country’s first female chancellor. If she doesn’t manage to inject more
of her original free-market ideas into the coalition, that might be all
she will be remembered for.
all parties approve the coalition treaty at conferences in the coming
days, Ms. Merkel is destined to make history on Nov. 22 by becoming the
country’s first female chancellor. If she doesn’t manage to inject more
of her original free-market ideas into the coalition, that might be all
she will be remembered for.