Germany’s Coalition of the Losing Angela Merkel clings to power with more policy concessions to the left.
https://www.wsj.com/articles/germanys-coalition-of-the-losing-1515802143
Angela Merkel took a big step Friday toward forming a new government at long last, and it’s not a step forward. She’s paying a price for the stability that Germans are said to crave.
Mrs. Merkel has struggled to form a governing coalition since September’s murky election result left her Christian Democratic alliance (CDU/CSU) as the largest bloc in parliament but with a much-diminished plurality. She first tried and failed to form an odd-fellow deal with the free-market Free Democrats (FDP) and urban-leftist Greens. Now she has turned to the center-left Social Democrats (SPD) to form another unlikely Grand Coalition of the sort with which she’s governed for eight of her 12 years in power.
The SPD came reluctantly to the latest coalition talks. After suffering their worst electoral showing since 1949, they rightly concluded voters had punished them for cooperating with Mrs. Merkel instead of offering an alternative. Some had argued the party should enter a new Grand Coalition only if it could drag Mrs. Merkel much further to the left. The SPD rank and file could still tank the latest deal in a party vote later this month if they don’t think it goes far enough.
From that perspective, Friday’s preliminary deal could have been worse. Mrs. Merkel has won permission to offer €10 billion in income-tax relief by phasing out a “solidarity surcharge” originally imposed to rebuild the former East Germany. Both parties also admit Germany won’t meet its ruinously expensive goal of reducing CO2 emissions by 40% below 1990 levels by 2020. They now commit vaguely to hitting that target “as soon as possible.”
Yet most of the rest of the deal consists of bows to the SPD on economics. Rather than more aggressive tax relief, the outline agreement foresees €36 billion in public works and other spending. Mrs. Merkel also will make some pension benefits more generous and shift more of the cost of health insurance to employers from employees. This follows a coalition deal with the SPD four years ago that lowered the retirement age and introduced a minimum wage, among other sops to the left.
Taken together, this means Mrs. Merkel would finish this term in 2021 having spent eight years eroding the labor-market reforms of the early 2000s that revived Germany as an economic engine in Europe. This coalition agreement won’t cause a resilient economy to stall, but it will leave Germany more exposed to the next global slowdown.
If such policy compromises were popular, Mrs. Merkel would have won enough votes in September to keep her from having to form another coalition of the losing despite a healthy economy. Voters seem to want more, which is why they turned to parties like the FDP and the far-right Alternative for Germany (AfD) to protest Mrs. Merkel’s lock on power.
With her time in office almost certainly ending in four years, the pressing question now is whether any other mainstream German politician or party will do better at offering serious policy alternatives.
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