Germany’s Balanced Budget May End Finance Minister’s Career
Germany's Balanced Budget May End Finance Minister's Career
(Bloomberg) --
His defense of Germany’s legendary fiscal rigor may end Finance Minister Olaf Scholz’s chances of getting the top job in Europe’s largest economy.
To have a shot at succeeding Angela Merkel, Scholz first needs to win the leadership of his Social Democratic party. And there lies the problem. His main contender in the run-off for that post, as well as much of the party’s rank and file, oppose his zero-deficit spending policy. They want more funds for social welfare, environmental protection and education, for example.
But loosening the purse strings comes with its own set of risks. Not only would Scholz be seen as a turn-coat by the general public, which largely cherishes a frugal government. He also agreed to a balanced budget when signing up for the job. Abandoning it would rile Merkel’s Christian Democrats and risk exploding the coalition. Instead, he’s sticking to budget discipline, even if it means not becoming party chief or candidate for the chancellery.
“Scholz faces a huge dilemma. If he wants to win the party leadership, he needs to show flexibility on the budget,” said Juergen Falter, professor of political science at the University of Mainz. “And that harbors political dynamite.”
The finance ministry declined to comment for this story.
The party’s difficulties in many ways mirror Merkel’s broader struggles in the twilight of her chancellorship. The economy has slowed sharply, a highly splintered political arena makes governing more difficult in Berlin and the regions. At the same time, her own designated successor, Defense Minister Annegret Kramp-Karrenbauer, has failed to gain traction in her party.
True, Scholz won the first-round ballot last weekend for SPD leader as the only candidate to have clearly defended the government’s track record. But he had only a narrow margin over the runner-up, Norbert Walter-Borjans, the 67-year-old former finance minister of North Rhine-Westphalia who favors dumping the balanced-budget idea and exiting government.
Dry Wit
An able debater with a dry wit, Scholz is one of the most experienced hands the party has. But the soft-spoken, 61-year-old trained labor lawyer is also seen as rather stiff and old school, particularly among younger Social Democrats.
Early in the summer, Scholz had no interest at all in running Germany’s oldest party but then realized a rudderless SPD struggling in opinion polls wasn’t good for his objectives either.
"Despite the bad numbers for the party, the SPD’s top politicians get good evaluations," Scholz told Sueddeutsche Zeitung on Thursday, adding that it was time Germany be governed without the CDU and its sister party CSU. "I too am pretty far ahead."
Walter-Borjans already signaled that he won’t let Scholz off the hook and that he plans to center his campaign squarely on the budget issue.
“What’s important for us in the future is that we invest and not fail because of the black zero,” he said in reference to Scholz’s balanced budget policy. “There are a lot of things that we can’t get done in this coalition.”
Opinion Poll
Anticipating heavy flak, Scholz’s aides with the help of Merkel’s staff, are working on a defense strategy that will focus on government achievements so far.
According to an opinion survey by polling firm Civey this week, there’s a good chance Scholz may lose his wager. More than half of SPD voters favor the duo led by Walter-Borjans against just over a third for Scholz’s ticket, according to the poll published by news magazine Der Spiegel.
“It’ll be very tough for Scholz,” said Professor Falter.
To contact the reporter on this story: Birgit Jennen in Berlin at bjennen1@bloomberg.net
To contact the editors responsible for this story: Ben Sills at bsills@bloomberg.net, Raymond Colitt, Caroline Alexander
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