Germany’s ruling coalition grapples with a wrecked budget

German isfamed GDP GDPFDP for long, powerful words that deliver meaning with pinpoint accuracy. The termis not one of these. Confusingly, its six letters convey two very different ideas. means both guilt, as in , and debt, as in onerous money obligations. This mental link helps explain Germany’s peculiar concern with saving governments from the imagined sin of borrowing money. In 2009 legislators inserted a or “debt brake” into the constitution, placing an annual cap on deficit spending of 0.35% of on the federal budget (except in emergencies) and banning state governments from running deficits at all (as in many states in America). Predictably, these limits have prompted politicians to get creative, such as by putting borrowed money into off-budget special-purpose funds.When the governing “traffic-light” coalition took office two years ago, it inherited an “emergency” €60bn ($68bn, around 1.5% of ) kitty that had been earmarked for covid-19 relief, but never spent. This windfall helped Olaf Scholz, the incoming chancellor, seal a three-party deal: the Greens and his own Social Democrats could redirect the cash into climate-change and social programmes even as their stingy third partner, the liberal Free Democrats (), claimed credit for respecting the debt brake. So attractive was this strategy that the coalition soon created several other such vehicles, including a nominal €200bn fund to buffer the economy from shock energy prices and a stash of €100bn devoted to beefing up the army.