Germany's election contenders set out contrasting plans to revive the economy, reduce migration

[December 18, 2024]  By GEIR MOULSON

BERLIN (AP) — Leading contenders in Germany's upcoming election presented their programs on Tuesday, setting out contrasting visions of how to put new vigor into Europe's biggest economy and tackle other issues such as migration.

Chancellor Olaf Scholz, a center-left Social Democrat, will seek a second term in the parliamentary election expected on Feb. 23 — more than three months after his unpopular three-party coalition collapsed in a dispute about how to revive the stagnant economy. He hopes for a come-from-behind victory against center-right challenger Friedrich Merz, whose Union bloc leads all recent polls.

Also seeking the top job are Vice Chancellor Robert Habeck of the environmentalist Greens, Scholz's remaining coalition partner; and Alice Weidel of the far-right Alternative for Germany, which is polling strongly but has no realistic chance of governing because other parties refuse to work with it.

The Social Democrats, Union and Greens all hope to implement as much as they can of their programs presented Tuesday, but any new government will almost certainly be a coalition and require extensive compromises.

It's the economy ...
The Union is pledging tax cuts for individuals and companies and wants to raise the level at which the highest level of income tax, 42%, kicks in. It wants to make working overtime more financially attractive. It also wants to abolish a tax once paid by everyone to finance the costs of integrating the former East Germany, now levied only on higher earners. It hopes to free up money by reforming the benefit system for the long-term unemployed and getting more people into jobs. It also wants to cut the value-added tax rate on dining out.

Scholz's Social Democrats pledge a lower income tax burden for 95% of earners. They want to reduce value-added tax on groceries. The Social Democrats and Greens want to increase the national minimum wage, which will be 12.82 euros ($13.47) per hour on election day, to 15 euros — reprising an issue both parties campaigned on in 2021. Scholz's party wants a “made in Germany bonus” to encourage investment in new plants and equipment. It also wants to set up a “Germany fund” to invest public and private money in energy networks, innovative companies and building new homes. The Greens propose something similar to finance spending on infrastructure and want the “super-rich” to make a bigger contribution, for example to help finance education. All the contenders have proposals to reduce electricity prices.

To borrow or not to borrow
The Social Democrats and Greens want to reform Germany's self-imposed restrictions on borrowing — the “debt brake,” introduced more than a decade ago, which allows new borrowing to the tune of only 0.35% of annual gross domestic product, though it can be suspended for emergencies that are out of the state's control. The two center-left parties, which are vague about how exactly they would modify it, argue that it has become a barrier to investment.

Opposition leader Friedrich Merz, right, of CDU speaks as German Chancellor Olaf Scholz, centre, looks on during a plenary session at the German parliament Bundestag where he faces a vote of confidence, Berlin, Germany, Monday, Dec. 16, 2024. (AP Photo/Markus Schreiber)

The “debt brake” played a part in the collapse of Scholz's coalition in November. The chancellor's former coalition partners, the pro-business Free Democrats, insisted on upholding it strictly. The Union wants to hang on to it, arguing that it already has proven its flexibility in times of crisis and prevents Germany from burdening future generations with debt. But Merz has signaled that he might eventually be open to a future reform.

Migration
The Union wants Germany to turn back at its border migrants trying to enter from other countries in Europe's free travel zone and seek asylum. It wants to increase deportations of migrants who aren't entitled to stay and designate more “safe countries of origin,” allowing authorities to speed up asylum proceedings. It is pledging to reverse legislation approved under Scholz that eased the rules on gaining citizenship and ended restrictions on holding dual citizenship.

The Social Democrats argue that measures the government has taken, including border controls, are already reducing irregular migration significantly. The Greens want a “fair” and “binding” distribution of asylum-seekers in Europe.

And what about Ukraine?
Germany is Ukraine's top military supplier in Europe and its biggest after the United States. All three leading contenders pledge continued aid, but there are differences of emphasis. Scholz says he wants Germany to remain the biggest supplier in Europe but is touting his “prudence” in ensuring that the war doesn't expand into a conflict between Russia and NATO and underlining his insistence that he won't supply long-range Taurus cruise missiles to Kyiv.

The Union and the Greens have been more open to sending the long-range missiles. The Union wants to set up a “contact group” with France, Poland and the U.K. to consult with the United States on a strategy to support Ukraine and provide “credible security guarantees.”

Current polls suggest it's likely that at least two of the Union, Social Democrats and Greens will end up having to govern together.

“We want to become so strong in this election ... that others have to ask themselves whether they are prepared to work together with us, and we aren't the ones who have to adapt to others and run after them,” Merz said Tuesday.

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