Confrontation course
June 8, 2010
Opposition parties, unions and interest groups have vowed to go on a confrontation course with the Chancellor Angela Merkel's center-right coalition government after it unveiled a package of tough austerity measures on Monday aimed at reducing Germany's billowing budget deficit.
After two days of budget talks in Berlin, Merkel called the unprecedented 80-billion ($95.6 billion) savings package a "show of strength." Germany would be setting an example to the rest of Europe, she said, acknowledging the need for "solid finances" in the aftermath of the Greek debt crisis.
Merkel's governing coalition rejected calls to raise taxes, instead announcing a series of cuts to the country's social security system, especially welfare benefits for the long-term unemployed.
Deputy Chancellor Guido Westerwelle, head of the liberal Free Democrats (FDP), stressed that there would be no increases to income tax or value-added tax.
Coalition for the rich
The chairman of the German trade union federation (DGB) Michael Sommer, sharply criticized the "lack of prospects" and "social imbalance" in the government's austerity measures.
"The government waives the possibility of additional income, just to comply with the FDP taboo on fiscal policy," said Sommer. Higher earners and the rich will be "spared" from the government spending cuts, he added.
The DGB chief said the long-term unemployed would be overly burdened. The result of making savings to labor policy would lead to an increase in unemployment. "What is needed is a wealth tax, a sensible inheritance tax as well the raising the top income tax rate," said Sommer.
Axing the poor
The opposition Social Democrats and the Left party said they would resist the government's monetary policy. SPD party chairman Sigmar Gabriel described the measures as "mean and half-baked."
Gabriel said Merkel's government had acted in the interests of the "wealthy and the clientele of the Free Democrats."
"To put it bluntly, mom turned the washing machine on the gentle cycle for the clientele of the Free Democrats but switched it to the spin cycle for the unemployed, families, and also for cities and communities," said Gabriel using the nickname Merkel has acquired by some in political circles.
Gregor Gysi, parliamentary leader of the Left party in the Bundestag lower house of parliament, said the government's austerity measures were an "attack on the social peace."
Left party chair Gesine Loetzsch labeled the savings package "socially unfair," saying it did not amount to saving but rather cutting.
"It's a matter of a further redistribution from the poor to the rich," said Loetzsch.
Green party leader Claudia Roth said: "The poor will face the ax."
Industry picking up part of the tab
The government coalition also announced new taxes for industry. Energy companies like E.on, RWE, Vattenfall and EnBW will have to pay a tax on nuclear power to the tune of 2.3 billion euros each year. In addition Merkel's government plans to introduce an environmental tax for air transport, prompting a spokeswoman for German national carrier Lufthansa to remark that it was a "black day" for the industry. Banks will also have pay more in future if there is no solution to the financial crisis in Europe and worldwide.
Labor Minister Ursula von der Leyen defended the austerity measures:
"For me it was really important to protect pensioners who cannot do anything to change their situation," she said.
Her ministry will bear the brunt of the government spending cuts, mainly in social welfare payments totaling two billion euros a year. Cuts will be made to benefits for the long-term unemployed, which Merkel called "painful" and also to family allowances.
Author: Nigel Tandy (dpa/AFP)
Editor: Nancy Isenson