Germany's CDU and SPD Propose Massive Debt-Financed Investments
The coalition plan includes 500 billion euros for infrastructure and expanded defense spending, requiring constitutional changes to Germany's debt rules.
- CDU and SPD leaders have agreed on a plan to exempt all defense spending above 1% of GDP from Germany's debt brake, removing any upper limit on military funding.
- The proposal includes a 500-billion-euro, decade-long infrastructure fund, with 100 billion euros allocated to states and municipalities for projects like transportation, energy, and education.
- The plan represents a major shift in German fiscal policy, moving away from strict budget discipline toward substantial new borrowing.
- Constitutional changes will be required to implement the plan, necessitating a two-thirds majority in both the Bundestag and Bundesrat, with support needed from the Greens or FDP.
- Critics within the CDU and FDP have raised concerns about the long-term financial implications and the potential inflationary effects of the proposed debt increases.
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