December 12th, 2010
Public debts rise steadily. The so-called debt brake should, if they will ever take effect, limit the future funding of the state over burdensome debt. Behind this is the most laudable idea that citizens must be protected by tomorrow before the burdens of unrestrained public consumption today. Put another way: the excessive time-preference of today's consumer society in favor of increased future preference of saving must be lowered.
After their previous governments granted the explosive debt free rein, the new federal government seems in this respect to promise not significantly different conceptual breakthrough: the launching of the so-called growth acceleration law is first and foremost an expansive spending program, financed with new debt.
The state needs to be doing bondage debt limit is the one. It is necessary, but it is also effective, ie sufficiently? After all, the State may, if he's spending is not reduced or increased resort to Steuerhöhungen. In the “not significant”, ie indirect taxes of tax resistance is indeed experience not so hard. In combination with additional debt that was the strategy of the red-black predecessor.
But tax increases
Contradict all empirical experience, that is namely given an additional € in the state budget by the politicians and officials in doubt as wasteful an additional € budget in private, usually prevails over the top of the pencil computation. Moreover, it is true that a Euro in private planning more innovative and dynamic, more growth, unfolds as a government-managed €. This principle also applies to and in spite of the crisis. In this sense, tax cuts are in principle welcome.
Effectiveness of the debt brake in order to prevent the rotation of the control screw or the omission of tax cuts, spending must be limited to: government spending brakes! In contrast to the debt brake, it does not allow any alternative options and is far more effective. This implies, of course, that shadow budgets are obsolete.
If, as is common today, rates and indices are required to promote the practical implementation and enforcement of this political conception, then, the concept of government spending brake fixing a maximum rate of State. This embodies the government's share brake, which in Germany is so urgently needed to curb the proliferation of Staatsaugaben.
There is – as with the debt brake – no objective standards for a maximum state rate. But many empirical experience shows that it is good if the state considerably less than half of the production potential of an economy has claimed: for example between 35 and 40%. In Germany, we are now back at around 50%, much too high.
The government's share
Brake means that the increase in government spending is initially below the nominal GDP growth. This reduces the state rate. This below-average government expenditure expansion must be maintained so long, until the targeted state rate maximum is reached. Then the government can increase expenditure in accordance with the GDP growth path or – better yet – stay well below.
All else fails: The crux of the national debt explosion in Germany also indicates the dilemma of government spending expansion. These have to slow down. The necessary installation of a brake on government spending to fix a maximum state rate indicates a tough fiscal policy, because it contains a barrier to the activity fields of the populist politician. However, this must be a reason for the government's share in brake design and practical design does not contribute strongly in the public discourse and in political decision-making process.
If the new coalition, as they vehemently stressed, the sustainability of their policy, a policy of stimulating growth, increases in focus, then it is a new expenditure management of the state quota limit is a must.