Friedrich Merz, the leader of the Christian Democratic Union (CDU), is making no secret of his ambition to form a new government by Easter 2025. Merz’s coalition aspirations could be facilitated by the fact that a partnership with the Social Democratic Party (SPD) is currently the only viable option after the BSW failed to overcome the five-percent electoral threshold. With that hurdle cleared, Merz is aiming for a coalition that many see as realistic, while also dealing with the potential disruption of a crucial ruling by the Federal Constitutional Court set for March 26, 2025.
The urgency of Merz’s situation is underscored by his need to establish a budget for 2025, which remains uncreated, forcing the government to currently operate on a provisional budget. According to Article 110, Section 2 of the Basic Law, this budget should have been finalized by the end of 2024. With the former Ampel coalition failing to provide a budget, Merz’s administration could face significant financial challenges from the outset.
Merz is also confronting hurdles regarding the solidarity surcharge, a tax implemented to help cover the costs of German reunification. This surcharge, which stands at 5.5 percent, has had some politicians, including members of the Free Democratic Party (FDP), calling for its immediate abolition as early as November 2024. The call for its repeal stems from arguments that maintaining this tax primarily burdens businesses and high earners, with ordinary taxpayers already exempted since the passage of the “Solidarity Surcharge Repeal Act of 1995.”
Crucially, the ruling of the Federal Constitutional Court will determine whether this surcharge remains in force. If the court decides to declare it unconstitutional, Merz’s new government could be looking at a shortfall of 12.75 billion euros that had been expected from this surcharge in the 2025 budget. Moreover, there are concerns over the potential retroactive impact of such a ruling, meaning the state could owe additional repayments amounting to nearly 65 billion euros, thereby putting unprecedented financial strain on the new government.
In his campaign, Merz reassured the youthful electorate that they would have the chance to live in an environment of freedom, peace, prosperity, and a robust social welfare state. However, as plans for significant government spending on defense and infrastructure begin to take shape, the burden of the resulting debt could fall on future generations.
Meanwhile, exploratory talks between the CDU, CSU, and SPD have already led to multi-billion euro pension decisions that could further add to the fiscal pressures on tomorrow’s contributors. Critics are wary of these promising commitments to infrastructure and military spending, fearing they might lead to unsustainable debt accumulation.
In a surprising turn of events, a political battle emerged as rival factions engaged over financial plans. The Alternative for Germany (AfD) called upon the Left Party to request the immediate convocation of the newly elected Bundestag to impede the adoption of the new financing package. This sparked significant discourse, with the AfD arguing that the urgency of the proposed legislation could undermine democratic processes.
On March 18, 2025, the Bundestag deputies rejected motions to convene the new parliament for discussions on the financial package. The AfD and FDP, along with the Left and BSW factions, pushed for this delay, while the Union, SPD, and Greens majority voted against it. Activist Sahra Wagenknecht from the BSW joined forces with the AfD, suggesting that the Left should prevent the black-red budget from going through, although the Left resisted this collaboration.
Christian Görke, the parliamentary secretary for the Left, condemned any dialogue with the AfD, citing it as unconstitutional. He emphasized that their party, along with the social and financial concerns of the populace, remains dedicated to preserving democratic principles, rather than in any supportive engagement with the AfD.
As tensions escalate surrounding the proposed financing plan, fears of a high-stakes financial package—dubbed the largest in Germany’s history—have surfaced. This package aims to address the pressing financial needs across defense and infrastructure sectors, yet the implementation strategy has raised concerns about whether the current government can sustain such a debt increase while ensuring constitutional integrity.
While the AfD has positioned itself in opposition to this financial package, accusing the government of risking financial stability, they have found themselves in a compelling tight spot as the Left also critiques the method by which these discussions are being held. Görke stated in his remarks on March 16, 2025, that the required deliberative and transparent procedures are being sabotaged, as the political agenda shifts towards rapid approvals without proper scrutiny.
Consequently, multiple lawsuits have been filed at the Federal Constitutional Court against the old Bundestag's special sessions concerning the financing package, seeking to ensure that no irreversible actions can be enacted before a final ruling is made.
In conclusion, Friedrich Merz is steering through complex political waters, attempting to establish a government that balances not only immediate fiscal budgets but also obligations to future generations, all while navigating an uncertain judicial landscape concerning the solidarity surcharge that could alter the government's financial trajectory from its inception.
