Greens Target Spending Spree, ECB Shift in Post-Merkel Germany
(Bloomberg) -- Germany’s Greens aim to invest 50 billion euros ($60 billion) a year in a digital, environmental transformation of Europe’s largest economy, funding the plan with steeper taxes on the wealthy, looser debt spending and higher costs for polluting.
The country’s second-strongest party in the polls is also seeking to expand the mandate of the European Central Bank beyond maintaining price stability to securing wealth and jobs, according to its campaign platform presented on Friday.
The Greens are set to play a key role in Germany after Chancellor Angela Merkel steps down following elections in September. The program puts it at odds with her Christian Democrat-led conservative bloc, the likeliest coalition partner following the national vote.
“We’re presenting the program at a time when a political era is coming to an end and a new one can begin,” said co-leader Robert Habeck.
With the Merkel’s conservatives burdened by allegations of lawmakers profiting off the pandemic, the Greens have momentum. In regional ballots last Sunday, the party cemented its decade-long hold on power in Baden-Wuerttemberg with a third straight victory and gained the most support in neighboring Rhineland-Palatinate.
The Greens will decide on a chancellor candidate -- likely between the leadership duo of Annalena Baerbock and Habeck -- by late May. Around the same time, the conservative bloc -- which is still developing its own platform -- will choose between CDU leader Armin Laschet and Markus Soeder, head of the Bavarian CSU sister party.
Here’s a look at the Greens’ key policy proposals:
The party’s 10-year investment program is equivalent to an annual boost of about 1.5% to the Germany economy, based on current levels. The program calls for spending in a wide array of initiatives including high-speed Internet, research in quantum computers and biotechnology and climate-neutral infrastructure.
Looser Debt Brake
One of the most controversial policies could be plans to reform Germany’s constitutional debt limits. The proposal calls for investment to be treated as public assets, allowing the state to take on more debt and take advantage of low interest rates.
The Greens plan to target the finance industry, with a return to what they call “boring banking.” That means strict regulation on capital-market speculation and obligatory leverage ratios. Investment banking would be split from the deposit business. All parts of the finance industry would be regulated, and watchdogs would get more teeth to prevent a repeat of the Wirecard AG scandal.
On the European level, the party says that the ECB should pursue high employment and social welfare alongside controlling inflation -- a difficult change to push through.
The burden on the central bank would be eased by a common fiscal policy in the euro-area. Meanwhile, banking union should be completed through a European Union guarantee for savings, and the European Stability Mechanism should be developed into a European IMF, which would grant member state credit lines.
Tax the Rich
The Greens would raise taxes on well-paid people as well as increase levies on capital gains and wealth. Manager remuneration would no longer be written off as an operating expense. Meanwhile, tech companies such as Google and Facebook would be subject to a digital tax.
Ending Fossil Fuels
The auto industry would face the end of an era, with no combustion cars registered from 2030. The shift to renewable power would be accelerated under a plan that includes solar panels on every new roof and using 2% of German land for wind power. The phase-out of coal energy would be moved forward to 2030, eight years earlier than planned.
To encourage more efficiency, the Greens would set a minimum price for carbon-dioxide for industry and increase the CO2 price for transport and heating to 60 euros a ton in 2023.
To prod a wave of new companies, the Greens want to offer a program to provide easy access to as much as 25,000 euros in seed funding. The program includes targeted support for women entrepreneurs. Also, startups should have better access to public tenders.
The Greens want an overhaul of NATO, claiming the alliance lacks a strategic perspective. The party also rejects the target of spending at least 2% of gross domestic product on defense.
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