Berlin. Friedrich Merz (CDU) still sounded very clear on Wednesday evening. The Chancellor said that no one should doubt his determination to implement reforms. In the coming week, the focus will be on making the labor market more flexible. But the very next morning, several reforms blew up in Merz's face.
On Thursday, the Chancellery itself stopped Finance Minister Lars Klingbeil's (SPD) sugar tax. “The proposal in this form cannot gain a majority in the government,” said government circles. And that's not all. There are also signs of greater trouble in the labor market, taxes and pensions.
According to Handelsblatt information, the Union parliamentary group wants to increase the pressure on Federal Labor Minister Bärbel Bas (SPD) to advance reforms in the labor market and pensions. Accordingly, the Union parliamentary group leadership discussed on Thursday not to agree to Finance Minister Klingbeil's income tax reform in the Bundestag until Bas presents draft laws.
It could not be the case that the measures desired by the SPD would all be implemented immediately, but that the reform projects implemented by the Union would be delayed, it was said. This was the unanimous opinion of the group leadership. At the beginning of July, the coalition committee agreed on reforms. The Union faction said that the SPD was expected to keep its promises.
The Bundestag will discuss the income tax reform in the first reading on October 8th. Among other things, this provides for an increase in the so-called “rich tax” for top earners. The SPD saw this as a major negotiating success.
The CDU/CSU says they were only willing to make this concession because in return the SPD made moves on pensions and labor market policy. These laws were still a long time coming. But it is politically linked.
A government representative feels “real traffic light vibes,” alluding to the final phase of the coalition made up of the SPD, Greens and FDP. At that time, the coalition partners no longer governed together, only against each other. The situation is similar now: Instead of bringing the reform package approved at the beginning of July to its goal, the CDU, CSU and SPD have torn it up again at every turn in the past few weeks:
So it goes back and forth. How does the federal government plan to achieve reliable results in these disputes? How to set up an orderly household? And are the coalition leaders still strong enough to push through the planned reforms? The autumn of reforms is currently looking more than difficult.
The Chancellor hardly seems able to be a driving force in the coalition anymore. In both the CDU/CSU and the SPD, Merz is being discussed behind closed doors with unprecedented brutality. There is talk of an “apparent dead person” who is only chancellor because no one else wants to do his job.
But power is also shifting in the SPD: the party's new strong woman is reform critic Manuela Schwesig. In the CDU they are already saying that the SPD is being “remotely controlled” from Mecklenburg-Western Pomerania.
Since the recent state elections in East Germany, it has become increasingly clear that nothing is the same anymore. The federal government is weakened, while the parliamentary groups and the prime ministers are making new claims to power.
According to a Forsa survey, voters have significantly greater trust in Prime Ministers such as Manuela Schwesig, Cem Özdemir (Greens, Baden-Württemberg), Hendrik Wüst (CDU, North Rhine-Westphalia) or Markus Söder (CSU, Bavaria) than in the Chancellor. But neither the CDU prime ministers agree nor the leadership of the Union and SPD are strong enough to set the direction.
Even party insiders don't know where exactly the center of power is currently located in the CDU. “At least not with the classic leaders,” is how one describes it. “Everything is moving.” The situation is “very special”. Although the prime ministers felt empowered by Merz's weakness, they have not yet been able to agree on a new course.
After the election defeats in East Germany, some CDU prime ministers are pushing for a more social balance in the reform package. Boris Rhein from Hesse and Mario Voigt from Thuringia, for example, are calling for planned tax increases on tobacco, alcohol and sugar to be waived. The so-called pension at 63 should also remain, demands Michael Kretschmer from Saxony.
At the same time, the Prime Ministers are now focusing on quickly implementing the agreed reforms. “A few projects now have to be completed, which in my opinion have been delayed for too long,” said NRW Prime Minister Wüst.
In the Union, they especially want to finally see the draft law from Labor Minister Bärbel Bas (SPD) on pensions. “We will only regain trust if we decide now,” says Union parliamentary group vice-president Johannes Winkel. If the Bas Ministry is unable to formulate a draft law, “we will be happy to help”.
At the same time, the CDU is faced with the question of what its own direction should look like. The party says we have to position ourselves “broader”. On October 11th, the CDU Prime Ministers will go into retreat with the Chancellor. Thuringia's Prime Minister Mario Voigt is calling for nothing less than a “programmatic new beginning” for the meeting.
The fact that the coalition committee wants to talk about pensions and labor market policy on October 7th is not a problem. “Nothing significant would be decided there,” it was said in advance. But the CDU, CSU and SPD want to rebuild trust there, as a coalition member says. That's why the appointment is important.
However, influential forces in the Union also advise not to convene the coalition committee as long as the many reform projects that have long been decided on have not been implemented. “If you meet permanently and decide but then don’t implement it, that doesn’t add to your credibility,” warns a leading Union politician.
The many reform projects in the queue are causing frustration in the CDU and CSU factions. “I expect that what we have agreed will be implemented,” said Union parliamentary group vice-president Winkel. It is “frightening”, even “irresponsible”, to conclude from the state elections that the renewal of the country is now canceled.
Union politicians, however, are critical of the tax reform, which would not provide enough relief for many people, whether their coffers are tight or not. In turn, increasing taxes on tobacco or sugar more than planned also causes trouble. 20 Union MPs are threatening not to agree to the budget for 2027 in its current form. “We are not the federal government’s vicarious agents here,” explained Union MPs in an internal meeting two weeks ago.
What causes further frustration is that even the few small savings are being questioned. Without cuts in housing benefit, parental allowance or maintenance advances, budget politicians warn, there will be a gap in the 2027 budget of five to six billion euros. Nobody knows how this will be closed shortly before the end of the deliberations.
The SPD senses the weakness of its coalition partner. The credo since the state elections: People must not perceive reforms as just cuts. These are “so-called reforms that are not reforms,” says SPD parliamentary group leader Matthias Miersch.
That's why the SPD tried to renegotiate the care reform this week. Instead of just cutting benefits, she wanted to cap the cost of care. Those responsible in the CDU were “surprised” at the weekend when the SPD suddenly mobilized against the reform that the cabinet was supposed to decide on in the middle of the week.
Negotiations continued throughout the night on Wednesday, and there was disagreement even a few minutes before the ministers met with the Chancellor on Wednesday morning. When Health Minister Carsten Linnemann (CDU) appeared before the press after the cabinet meeting and announced the decision, he appeared exhausted.
Despite the chaos in the coalition, a leading Union politician is confident that large parts of the reforms will come in the end. It is important to take people's fears away despite all the “cuts”. The coalition must therefore accompany cuts with financial support and better social systems. After all, there is at least something in common between the Union and the SPD.
