What can Germany's Chancellor Olaf Scholz still get done?

In between settling scores with his erstwhile finance minister during an occasionally hot-tempered speech in the Bundestag this week, Chancellor Olaf Scholz tried to take a conciliatory tone with the opposition.

"My proposal, my appeal to this house: Where we are unified, let us act unified. It would be good for our country," he told the chamber, before running through a few of the many draft laws now stuck in the parliamentary pipeline, and which he would like to push through before the end of his tenure. These include protecting the Constitutional Court, increasing child benefits and tax cuts.

Scholz's words were aimed mostly at the center-right opposition bloc of the Christian Democratic Union (CDU) and its Bavarian sister party, the Christian Social Union (CSU), which — following the rupture of Scholz's coalition with the Free Democratic Party (FDP) — now holds most of the political power in the parliament.

Friedrich Merz, the leader of the CDU/CSU group (and effectively now chancellor-in-waiting), warned the chancellor that his party would not be the "reserve players for your broken coalition." And yet, political observers note, there is scope for cooperation between the parties — and there are indeed one or two draft laws that Merz's party has an interest in passing before the Bundestag election set for February 23, 2025.

Risks for the CDU

In fact, one law was already passed on Thursday with the support of all the parties in the Bundestag, except the far-right Alternative for Germany (AfD) and the socialist Left Party. But it was relatively minor — a law regulating the inheritance of farms — and it may prove to be an exception because cooperating with Scholz will be a tactical risk for the CDU in the impending election campaign.

Ursula Münch, director of the independent Tutzing Academy for Political Education, thinks the CDU will cooperate as little as possible with Scholz's minority government in the next few weeks.

"Even on measures that the CDU might consider worth striving for, it will always feel pressure not to improve Scholz's image," she told DW.

Merz will also be keenly aware that any cooperation will leave him exposed to attacks from the far-right AfD and the populist Bündnis Sahra Wagenknecht (BSW), who like to paint the CDU and SPD as indistinguishable parts of a mainstream "cartel" of the political classes.

Guaranteed: Protecting the Constitutional Court, help for Ukraine

As of now, only one of Scholz's big plans is certain to gain support from the CDU/CSU: the so-called "AfD-proofing" of the country's highest court.

This draft law, which CDU lawmakers helped to draw up, would ensure the number of judges (16), the judges' terms (12 years) and their maximum age (68) are fixed in the German constitution. A separate draft law is also being formulated to create alternative paths to electing judges, should there be an impasse in the German parliament.

These laws would effectively prevent the AfD — or any party that wins more than a third of the seats in the Bundestag — from blocking the selection of new judges to the court or changing rules relating to it. Given that the AfD could potentially significantly increase its share of seats in the Bundestag in February, it is seen as vital to pass the law now.

Good chance: Tax relief, support for Ukraine

But everything else Scholz had planned is up for discussion — and the CDU/CSU has already said it would only begin negotiating after Scholz triggers the next election by losing his vote of confidence on December 16.

Effectively assured, for now, is Germany's support for Ukraine, since the SPD, the CDU and the Greens agree that it is essential. However, the coalition government has failed to agree on a budget for 2025 — in fact, that's why it collapsed — which means that additional support for Ukraine has not yet been agreed, though existing orders will be unaffected. Scholz is hoping the CDU will agree to send more money sooner, though that is still up for discussion.

Another project that might find CDU support is finding extra packages to support Germany's ailing industrial sector. That was both a major theme of Merz's speech on Wednesday and of an "industry summit" that Scholz attended in October, when leading industry associations complained of the high energy costs in the country. Scholz wants to introduce caps on energy charges for the industry. Merz might well be on board for something along those lines, but only if he deems it so urgent that it can't wait until he is chancellor.

One plan that does stand a chance of passing the Bundestag, whether or not it has CDU/CSU support, is the introduction of tax reductions to prevent "bracket creep" — when salary increases push earners into higher tax brackets leading to an effective drop in their net income. This can lead to decreased consumer spending and a so-called "fiscal drag" on the economy.

This tax relief was a demand of the Free Democrats, who are now expected to support the plan despite the acrimonious split. It is said to be worth €23 billion ($24 billion) — which could leave a hole in government finances.

Little chance: Pension reform, raising child benefits, 'Deutschlandticket'

Scholz is likely to have to say goodbye to many of his big plans. The pension reform, drawn up by the SPD-led Labor Ministry, would have meant keeping the pension level at 48% — the percentage of an average working income that a country's state pension provides in old age — until 2039.

The package also included the introduction of a share-based pension, intended to relieve the burden on the pension insurance system by using the income from a €200 billion ($210 billion) fund financed by loans and stock market investment. Both the CDU and the FDP have made clear that they would not support the move, on the grounds that keeping the pensions at a high level will disadvantage younger generations.

Another plan that now looks unlikely for the SPD to pass is a rise in child benefits from €250 to €255 a month. This will now probably have to wait for the approval of a 2025 budget in the next parliament. Theoretically, the Bundestag could introduce a law specifically to raise it, but, as Münch put it, "I don't see the CDU doing Scholz that favor."

Caught in a similar limbo is the Deutschlandticket, the Germany-wide ticket that allows travel on all local and regional transport for a fixed price. The government had already decided to continue the scheme but raise the price of this from €49 a month to €58, but its survival under a CDU/CSU-led government is far from assured.

The ticket is currently being subsidized jointly by the federal and state governments, but to extend the scheme will require a reform of that agreement — and some conservative-led states, like Bavaria, would like to see it scrapped altogether.

Edited by: Rina Goldenberg

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