Left economists against senate: call against debt brake

The R2G state of Berlin has passed a tough debt brake. Now economists – and a prominent leftist – are protesting.

Fan of the debt brake: Berlin’s Finance Senator Matthias Kollatz (SPD) Photo: dpa

Leading left-wing economists criticize the planned debt brake of the state of Berlin in an appeal. The Senate’s draft, if implemented, would "lead to insufficient investments and a loss of quality in public services in the long term," according to the paper, which was obtained by the taz. This is "grist to the mill of resentment-driven forces" and undermines the "strategic majority capability for progressive politics".

The appeal, entitled "Berlin’s debt brake must not become a brake on investment," is signed by Dierk Hierschel (Verdi division head for economic policy), Jan Priewe (Hans Bockler Foundation), Sabine Reiner (Verdi department coordinator), Thomas Sauer (Jena University of Applied Sciences), Axel Troost (Rosa Luxemburg Foundation) and Harald Wolf. Wolf’s signature is the most politically remarkable among the call: The federal treasurer of the Left Party is also a member of the Berlin House of Representatives and was Senator for Economics from 2002 to 2011.

The appeal is primarily directed against a special Berlin regulation: although the debt brake is not to be included in the state constitution as in other federal states, and can therefore be changed again or abolished with a simple majority. Instead, the budgets of state-owned companies will also be included in the debt brake.

Berlin would thus tighten the regulation enshrined in the Basic Law, which will also apply to the federal states from 2020. Among other things, this would jeopardize investments in the transport companies, the S-Bahn, the universities and the baths, according to the appeal. In addition, the incentive would be increased to switch "increasingly to public-private partnerships (PPP)".

Current regulation was a compromise

The Senate had passed the Berlin regulation on the debt brake at its meeting on June 18. It is due to be debated in the House of Representatives in August. With the signature of Wolf, who is also a member of the main committee, the conflict between the SPD, the Greens and the Left over the debt brake could break out again.

The current regulation was a compromise. While Die Linke primarily rejected the constitutional status of the debt brake, SPD Finance Senator Matthias Kollatz had insisted on the inclusion of state-owned companies. This caused astonishment because Kollatz himself had shown a way out of the restrictions of the debt brake some time ago: The Berlin school buildings are to be built by the state-owned housing company Howoge, which was not previously affected by the debt brake.

The debt brake was passed in 2009 at the instigation of the then grand coalition in the federal government. Left-wing economists have long considered it to be wrong. In the spring of this year, however, Michael Huther of the Institute of the German Economy (IW) also joined the critics. The debt brake prevents necessary investments, Huther argued – similar to his left-wing colleagues now.

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