What is meant by balanced load

National debt

Public debt (SV) comprises public borrowing, usually on the capital market, which enables budget deficits to be financed. After taxes, SV is usually the second most important source of income for the state. The term is used both for the total SV accumulated over time and for the new, annual borrowing. In the latter case, the net borrowing (gross amount minus repayment) is usually meant, although the gross SI is also of interest for certain analytical purposes (e.g. debt management). In the case of the SV - sometimes also referred to as public debt - the differentiation of the concept of the state and thus the question of which institutions are included must be taken into account. This is all the more true as the partial shifting of borrowing to "state-related" special funds allows the SV to be disguised optically and statistically "beautiful", which among other things. international and intertemporal comparisons made difficult. The close connection between fiscal and monetary policy can be seen among other things. in that government deficits can also be financed directly via the central bank's printing press - formally via central bank loans to state borrowers. Because of the associated risk of abuse, the → Deutsche Bundesbank was only allowed to have narrowly limited cash advances to the federal and state governments. In connection with the introduction of the euro and the transition to the European System of Central Banks, lending to the state has been completely prohibited, but the European Central Bank can, as part of its monetary policy, buy government bonds on the secondary market and thus indirectly support them, as was the case with the sovereign debt crisis of some euro countries Already happened in 2010.

1. Problems of public debt

Regardless of their worldwide use, SV is repeatedly with regard to its basic benefit, v. a. but its justifiable extent and the associated risks have been discussed controversially, with economic, fiscal, legal and political arguments playing a role.

Economically for SV, among other things. asserted that it enables an intertemporal shift of burdens into the future and thus the participation of later generations in investments from which they also benefit. State investments would only bring direct cost-covering income in exceptional cases, but if they strengthened the production potential and increased the GNI, they also support the taxpower and indirectly lead to additional government revenues. On the one hand, concerns are directed against the limited calculability of such consequences (up to the question of whether later generations see today's "investments" as "enrichment" at all). On the other hand, questions are asked about the displacement effect of interest-resistant government borrowing from private investors and the resulting growth losses. SV also plays an important role in the concept of countercyclical global control (→ Stability Act), in which the state has the task of supporting demand with the help of loans in the event of weak demand during the recession (deficit spending). In addition to other problems, however, practical experience with global control has shown that the intended symmetry - corresponding reduction of the SV in the boom phase - was unreal, primarily due to inhibiting factors in the political decision-making process. Fiscal problems arise from a. from the interest burden of the national debt, which narrows the budgetary scope. The extent to which additional SV appears to be justifiable from this point of view depends, in addition to the level of the "legacy", in particular on the GDP growth rate and the interest rate level. For the evaluation of the amount of an SV, ratios such as SV to GDP (debt ratio), new SV to GDP (loan financing ratio) and interest burden of SV to state budget (interest burden ratio) are helpful, but it has not been possible to determine scientifically proven concrete limit values. In terms of political enforcement costs, the possibility of shifting the burden associated with SV is a constant temptation to make excessive use of this instrument in the political decision-making process. This has been asserted with different accentuations both for politicians - argument of election-fixated "myopia" - as for voters - in addition to "forgetting about the future" and the argument of "debt illusion".

2. Development of the national debt in the Federal Republic

The currency reform of 1948 (→ currency) was also associated with an extensive compulsory debt discharge of the state, so that the FRG, in contrast to the victorious powers USA and Great Britain, which dragged on a SV that had grown considerably due to the war, started with an extremely low legacy burden. The debt ratio remained below 20% until the mid-1970s, but then jumped to 40% by the early 1980s in connection with combating the consequences of the oil price explosion. The policy of budget consolidation then at least brought about a stabilization of the debt ratio, which in 1989 was the second lowest of the seven largest western industrialized countries after Great Britain at 43% of GDP. At this point in time, a good half of the SV was attributable to the federal government, a third to the federal states and an eighth to the municipalities, which was also reflected in different interest rates (federal 11%, federal states 7%, municipalities 4%). However, the differentiation between the individual federal states (e.g. front-runner → SL with a higher interest rate than the federal government) and municipalities (usually higher rate of interest in large cities) must be taken into account.

In the first step, financial policy reacted to the challenge of the German association as an exceptional case par excellence with a strong increase in the SV (combined with outsourcing to various special funds). This is particularly justifiable when it comes to financing state infrastructure investments in East Germany. as a prerequisite for urgently needed private investment. Despite the low formal debt assumption from the → GDR (28 billion DM), the need for transfer to East Germany is extremely underestimated. forced a renewed, far-reaching budget consolidation at the various levels of government, but this was approached too late and too cautiously. The often criticized outsourcing of the SV to different special pots (fund "Deutsche Einheit", loan settlement fund, ERP special assets, → Treuhandanstalt, housing in East Germany) was at least partially consolidated in 1995, insofar as an "inherited debt repayment fund" assigned to the federal government as a subsidiary budget (end of 1996 332 billion euros). DM) took over the debts of the dissolved → Treuhandanstalt (205 billion DM), the loan settlement fund (103 billion DM) and part of the debts of the eastern German housing industry.

The SV rose by around two thirds from DM 929 billion in 1989 to € 1,579 billion in 2007, with the federal government being disproportionately affected. The financial policy criteria agreed in Maastricht with regard to the introduction of the common currency euro (1st annual new debt up to 3% of GDP, 2nd total debt up to 60% of GDP) was also temporarily not complied with, and even less with those in the Stability and Growth Pact ( StWP) balanced state budget targeted outside of recession times. Rather, D was the second country after Portugal to accept a "blue letter" from Brussels in 2002 because the 3% criterion was clearly exceeded. As a result, however, the financial sanctions provided for in the StWP did not come about; rather, the StWP - as feared by critics - had its teeth pulled by means of a reinterpretation with D's significant participation. In the wake of the global economic crisis that broke out in 2008 and how it was successfully combated, new indebtedness grew extremely in Germany in 2008-2010 too. The consequence was a level jump in total debt to € 2,080 billion in 2010 and from 65% of GDP in 2007 to 84% in 2010 (almost two thirds of which are now with the federal government). As with earlier "jumps" in the credit financing ratio (1967, 1975, 1981), the discussion about the limits of the SV has intensified against this background.

3. Institutional limits of public debt

In view of the weakness of the effectiveness of market control in the case of SV - the state's interest rate neglect, cyclical behavior pattern with an initial risk illusion and the following speculative, panic-like overreaction on the part of lenders (as the example of the recent sovereign debt crisis in some eroland countries shows) - institutional barriers against excessive SV have been repeatedly discussed . In the FRG, with the 1969 financial reform, the federal government was given a debt limit in Art. 115 GG, according to which the income from loans may not exceed the investments estimated in the budget and exceptions are only permitted to prevent a disruption of the macroeconomic equilibrium. A number of → federal states have made similar stipulations. For the → municipalities, loans should be included in the asset budget and are therefore more investment-related and, in addition, there is a potentially stronger external control over the mostly existing approval requirements of the municipal supervisory authorities. Unfortunately, this constitutional law barrier has proven to be ineffective in the empirical test due to the lack of clarity and the associated scope for interpretation of the terms "investment" and "macroeconomic equilibrium".

A new approach has been attempted as part of a reform of the → federal state. As the most important result of Federalism Reform II, a new "debt brake" was anchored in the Basic Law in 2009 (amendments to Art. 109, 115, 143d Basic Law). The individually complicated and linguistically unfortunate regulation stipulates that from 2016 the federal government may borrow a maximum of 0.35% of GDP annually, while for the federal states from 2020 any new borrowing will be excluded even under pressure from financially strong federal states. Exceptions apply, on the one hand, to natural disasters and exceptional emergency situations (e.g. global economic crisis) and, on the other hand, to economic situations that deviate from the normal situation. In both cases, repayments are to be provided for additional new borrowing. For the long transition period from 2011 onwards, five federal states (HB, SL, BE, ST, SH) will receive a total of € 800 million a year in consolidation aid if the restructuring is successful, half of which will be borne by the federal government and the federal states. A Stability Council has been created as a new, purely political monitoring body for the federal and state budget policy - also possible for the approval of consolidation aids - which consists of the Federal Finance Minister, the Federal Economics Minister and the State Finance Ministers. The interpretation of the exceptions, the decision-making process in the new Stability Council and unclear sanction options remain open flanks. The effectiveness of the new regulation remains to be seen. Nevertheless, it has already advanced to an export item and, at German insistence, is to be introduced in modified form in the other euro countries as well. As part of the financial aid for the euro countries affected by the sovereign debt crisis (GIIPS - GR, Ir, I, P, E), D has assumed considerable financial burdens, in particular in the form of guarantees, and has thus undermined the contractual exclusion of joint liability (no bail out) been. The European Financial Stability Facility (EFSF) alone, which is to be replaced in 2013 by the permanent European Financial Stabilization Mechanism (EFM) emergency fund, has a guaranteed sum of € 211 billion. In return, stricter budgetary supervision, among other things. A hardening of the StWP (however without automatic sanctions) has been agreed in the euro zone in order to continuously reduce the national debt of the members to the 60 percent limit. The goal is undisputed, especially since demographic developments in Germany are causing burdens in the future. However, it remains to be seen whether the most extensive institutional debt brakes on the national level and in the euro zone, some of which have only been made possible by the pressure of the crisis, will pass the test of reality.

Source: Andersen, Uwe / Wichard Woyke (ed.): Concise dictionary of the political system of the Federal Republic of Germany. 7th, updated Aufl. Heidelberg: Springer VS 2013. Author of the article: Uwe Andersen