People and Politics Forum 11. 06. 2010

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Germany's austerity package - Who will be affected?

Germany's policymakers want to save money. Next year Europe's largest economy plans to cut spending by €80 billion. Lower income earners are among those most affected by the cuts. But parents, civil servants and industry will also have to make sacrifices. How is the public reacting to the plans? And what will be the fallout for Germany's center-right coalition government.

Our Question is:

"How would you cut spending?"

Rolf Beese, Thailand:

"Our politiical representatives created this disaster. We all chose these bunglers at the ballot box. Now, unfortunately, we all have to sort the mess out. Let us put better people into government in future!"

Amine Bendrif, Morocco:

„Most of the austerity measures proposed by the government are socially unjust and hard to sell. the only proposal that could be somehow fair, pragmatic and for the long term beneficial is the cut of subsidies. However, that should include all the industries and especially the agriculture sector that costs the country huge amounts of money . the speculator, bankers and industries, which both caused and benefited from the financial crises should also pay the most part. It is time for politician to regain power and trust."

Heiko Kober, writing from the Dominican Republic, has this to say:

"We ought to think about Germany’s overblown bureaucracy and scrutinize its costs. There are some official positions no one has ever heard of or whose purposes no one can imagine. Germany could stop constantly sending gifts of aid all over the world. Anyone who lives abroad knows that these pits are bottomless and that the money doesn’t reach its destination. Germany ought to be more reserved within the European Union. Germany doesn’t always have to be the first to volunteer when another country asks for money."

Helge Storch, from Germany, says:

"The German government should publish all its expenditures. There are surely enough absurd payments that could be cut. For example, child allowances and welfare of any kind for non-Germans. Development aid to countries that are now much richer than Germany, for example Brazil. Asylum for criminals, for example, Somali pirates. Those governing us ought to provide a good example and cut some of their own privileges. Every euro counts."

Jordan Finch, writing from the US, favors reductions in welfare benefits:

"Social and welfare programs are the least important part of a country’s budget and should be the first place for cuts. Taxes on anybody, but especially the wealthy, hurt the economy because they stifle growth and investment. It is also important not to cut education spending because it is important to the future of the country."

Hermann Auer, writes from Thailand:

"The question raises certain implications, because 'when' much more important than ‘where’’. I’d save on a government that – in a crisis, of all times – comes up with a savings program based on the idea ‘Save when you're in need, because that's when you have time to do so!' In macro-economic terms, that’s dangerous nonsense! The state must save and invest counter-cyclically. If they have to save, then it shouldn't hit people who, bowing to necessity, have to spend all their income just to bring money back into circulation. Make cuts the where money will go into savings accounts or speculation, and be lost to the economy. They should be careful about cutting the civil service, because that merely adds to unemployment. Also, civil servants’ salaries and pensions remain within our weak domestic market. What should be cut are one-euro jobs and the accompanying subsidies, because they destroy jobs that pay into the social welfare system."

Rolf Bockmühl, Philippines, has a number of ideas:

"Cuts should affect all groups! But 1900 euros a month per couple should be allowed for pensioners and the long-term unemployed. 1200 euros for singles, and for families an upward sliding scale based on the number of children. Those who caused the crisis should be the first to pay. Then, reduce subsidies across the board, including for aviation fuel and farmers. The countless bureaucrats should give something up, especially in pensions. Capital gains should be taxed. Transit vehicles must all buy a sticker, and trucks should pay tolls on all roads, because they damage them. Finally, all federal and state parliamentarians should accept pay cuts. And the states should be redrawn. It is high time to get rid of the countless "principalities". The tax system must be simplified and made efficient, to ensure that the countless tax cheats and off-the-books workers finally pay their share. And finally, the cities and states must stop their wasteful spending. The Federal Audit Office should be strengthened. These things would bring in the needed money without much pain."

Bernd Kühne, also writing from Thailand, has a simple solution:

"Why don’t the government and parliament set a good example and do without 5-10 percent of their pay for the next 4 years? That wouldn’t hurt them, and the money saved would cover child allowances."

Gerhard Seeger, writing from the Philippines, is critical of the government:

"Unsurprisingly, the conservative-FDP coalition's savings plan places the biggest burden on those who have the least. They want to do this without raising taxes, a point especially to the taste of the free market FDP. Kurt Lauk (CDU) is right in his report that the FDP hasn’t arrived in reality. The only surprise is that the FDP isn’t touting its wonder weapon, tax cuts. Tax increases are absolutely necessary. But they have to stop burdening the little guy, who can hardly give any more. The rich should pay (and patriotism ought to make them willing to do so). There are super-rich people with many millions; a few million less won’t make them go hungry. That also goes for the big banks that earn lots of money by lending to the state at high interest rates. They have probably already covered their expenses with the interest. (…) It’s time to place a greater burden on the rich; even the FDP ought to recognize this, if it hasn’t completely lost touch with reality."

Uwe Börner from Germany wants more accountability:

"The Taxpayers Association says 30 billion euros are wasted every year. There should be more accountability for government workers and politicians. How can politicians allow people to come to Germany who never find a job? They remain welfare recipients, which is irresponsible and costs billions. In regard to health: every year I’m sent a catalog offering health vacations at the expense of the health insurance company; that costs millions. And politicians’ salaries are too high, especially those of EU politicians (…)."

Hoe Nguyenvan, from Vietnam, writes:

"Thrift is part of the German mentality. When I lived in the former East Germany, I became familiar with German thrift. The government’s savings program is a model, not only for Europe, but also for countries like ours. Thrift affects all people in all strata, but savings shouldn’t come from the unemployed and pensioners or from child allowances. The first to pay should be those who caused the crisis. Speculators should be heavily taxed (…)"

Martin Burmeister, writing from Venezuela, thinks subsidies need cutting:

"Every year, government outlays grow faster than revenues. That’s why studies should be made to see where in the last ten years higher outlays have really been worthwhile and where cuts can be made. Subsidies have definitely gotten out of hand and should be cut drastically."

Hubert Fuchs, writing from Finland, disagrees:

"After thinking about it a lot, it’s hard to find a revitalizing savings program that would rely on cuts after this disastrous German budget tsunami. I would not even think of cutting money for the military and our esteemed soldiers performing their difficult duty in Afghanistan (…) The German government should liquidate its gold reserves to balance the budget. Those who think money should be saved at the expense of the poorest have squandered their credibility. At some point they’ll realize you can’t get blood from a stone (…)."

Waltraud Maaßen, writing from New Zealand, thinks cuts should be targeted:

"I’d cut outlays for parliament, parliamentarians, the Federal President’s second seat of government, and development aid for China and Brazil. These countries are quite able to solve their own problems. Raise the tax rate for high earners, 5% more for those with 100,000 euros or more. Lower the military budget. But why should we rack our brains?"

Erwin Balli, writing from Columbia has very specific cuts in mind:

"I’d budget this way: reduce subsidies, that brings 5 billion. Cutting military spending brings in 1 billion. Reduce bureaucracy, another billion. Revoke the value-added-tax exemption for hotels: 1 billion. Increase inheritance tax: 2 billion. Increase wealth tax: 2 billion. Higher taxes on high incomes,:1 billion. Tax nuclear power plants for longer operating periods: 3 billion. Welfare cuts: 2 billion. Levy fees on banks to cover future financial crises: 5 billion. All in all: 23 billion. A budget like that would immediately release Germany from its conservative-FDP government, but the rest of the world would lose a source of entertainment."

Hannelore Krause, writing from Germany, has this to say:

"Waste not, want not." Unfortunately, no one applies this old saying. Now that the state has lived beyond its means for decades and more and more benefits have been distributed on credit, what’s important now is to save lots of money very quickly. Everyone knows this, but people don't want to give their share. They all scream as if their last breath were being taken. How can we feed the piggybank? By cutting defense and development aid! Moving the last federal ministries from Bonn to Berlin would save money. Millionaires could be burdened with a special tax. The middle classes shouldn’t be burdened too much; they already pay a lot. Savings could be made in the distribution of welfare benefit, which many people claim without justification because the volume makes checking up on it impossible. And maybe those the state pays to do nothing could show their gratitude by making a contribution. That would be good – including for the piggybank."

Adalbert Goertz, in the USA, favors one clear option:

"Cut military and weapons spending!"

In Brazil, René Junghans says do it properly:

"The government's austerity plans misfired badly. They targeted the country's poor and needy, instead of hitting the rich and affluent. I would introduce a wealth tax for bankers, speculators and millionaires, instead of slashing welfare benefits."

Mr Junghans says he's exasperated by the government's financial mismanagement:

"Not a single family would make it to the end of the month if they lavished out money the way the state does... Instead of transfering billions to Greece where money was siphoned away by corruption I would have invested these funds at home. Afghanistan is another example of terrible financial waste. Germany should not be involved there."

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