Friedrich Merz and the Betrayal of Fiscal Conservatism in Germany

A Politician’s Sudden Shift from Debt Hawk to Debt Enthusiast

Friedrich Merz, once known as the staunch defender against Germany’s "debt madness," has stunned political observers by embracing a fiscal policy that will push the country’s debt into the trillion-euro range. This dramatic U-turn represents a betrayal of his own campaign promises and the principles of his party, the Christian Democratic Union (CDU). Merz, who aspires to become the next Chancellor of Germany, has shown an extraordinary ability to shift his political stance for opportunistic reasons. His lack of backbone in addressing difficult issues has been evident, and this latest move may accelerate Germany’s economic decline.

The shift in Merz’s position is not just a change in policy; it is a complete reversal of his previous stance. He had long portrayed himself as the last line of defense against excessive borrowing, but now he is spearheading a debt spree that will have far-reaching consequences for Germany’s economy. Critics argue that this decision is not based on sound economic reasoning but rather on short-term political gains. By abandoning his commitment to fiscal responsibility, Merz has alienated many within his party and among voters who trusted his promises.

Foreign Policy Missteps: Merz’s Clumsiness on the Global Stage

Merz’s struggles extend beyond domestic policy. His recent comments on foreign policy matters have raised eyebrows and revealed a lack of understanding of global dynamics. In response to former FDP Finance Minister Christian Lindner’s suggestion that Germany should embrace policies similar to those of Argentinian President Javier Milei, Merz dismissed Milei’s approach as disastrous for the state and its people. However, Merz’s critique was poorly informed, as he seemed unaware of the significant economic improvements Argentina has experienced under Milei’s leadership.

Merz also mishandled his response to a speech by U.S. Vice President JD Vance at the Munich Security Conference. He criticized Vance’s remarks as overly assertive, stating, "I will not let an American vice president tell me with whom I should speak here in Germany." While this statement may have been intended to project confidence, it lacked a realistic understanding of Germany’s position on the global stage. Germany, both militarily and politically, is far from being a dominant power, and Merz’s defiance rings hollow. His failure to grasp the geopolitical reality may undermine Germany’s relationships with its allies and weaken its influence in international affairs.

The Historic Debt Spree: A Betrayal of Campaign Promises

Merz’s decision to pursue a massive debt program represents a 360-degree turnaround from the CDU’s campaign promises. According to a report by Der Spiegel, Merz was influenced by an internet rumor suggesting that former U.S. President Donald Trump would announce the United States’ withdrawal from NATO in his State of the Union address. This led Merz to agree to a debt-heavy coalition deal that will harm Germany’s economy without delivering any significant concessions, particularly on migration policy.

This agreement has been widely seen as a humiliation for Merz and the CDU. The Social Democrats, despite suffering their worst election result in over a century, managed to dictate the terms of the coalition negotiations. Merz’s willingness to abandon his party’s principles has set a dangerous precedent. It is likely that the CDU will also cave to the demands of the Greens, whose focus on climate protection projects will further strain Germany’s finances.

Democratic Legitimacy in Question: The Outgoing Bundestag’s Power Play

The decision to use the outgoing Bundestag to approve Merz’s debt plans has raised serious concerns about democratic legitimacy. The newly elected parliament has not yet convened, but the outgoing legislature is being used to pass far-reaching constitutional amendments that will bind future governments. This move has been criticized as a disregard for the will of voters, as it circumvents the democratic process and ignores the election results.

Dietrich Murswiek, a leading German constitutional lawyer, has condemned this approach, calling it "contempt for the will of the voters and the democratic legitimisation process." He argues that the old Bundestag is rushing to approve the debt program not because it is urgent, but to present the newly elected parliament with a fait accompli. This authoritarian tactic undermines the principles of democracy and sets a worrying precedent for future decision-making.

The Economic Fallout: A Recipe for Long-Term Decline

The debt spree, disguised as "special assets" (Sondervermögen), is massive in scope, equivalent to around 20% of Germany’s gross national product. This will push the country’s debt-to-GDP ratio from 65% to 85%, violating the Maastricht debt criterion and setting off alarm bells in the financial markets. The consequences of this policy will be far-reaching, with rising capital market interest rates and reduced private investment activity.

Critics warn that the program will lead to inflation, lower productivity, and a decline in economic growth in the medium term. While short-term growth may be artificially stimulated through government spending, the long-term effects will be devastating. Germany’s inefficient procurement system will likely waste a significant portion of the funds allocated for infrastructure and defense. For example, the state typically pays twice as much as private companies for the same infrastructure projects, diminishing the program’s real purchasing power.

In conclusion, Merz’s decision to embrace a trillion-euro debt program represents a catastrophic failure of leadership and a betrayal of the principles he once championed. The consequences of this policy will be felt for generations, accelerating Germany’s economic decline and undermining its global influence. The democratic process has been disrespected, and the economic future of the country is at risk.

Joachim Nikolaus Steinhöfel, a renowned German media lawyer and critic of Merz’s policies, has been vocal about the dangers of this approach. His analysis highlights the importance of responsible governance and the need for political leaders to prioritize long-term stability over short-term gains. As Germany embarks on this risky fiscal path, the world will be watching to see how this experiment unfolds.