May 19, 2021

Europe

GERMANY: What does it mean to go Green?

BY Luis Cornago, Carsten Nickel

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Report Contents

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( 5 mins)
  • The Greens are rapidly emerging as the new centrist player in German party politics and will most likely be part of the next federal government.
  • In its manifesto, the party supports ambitious public investment and a laxer approach to public debt, but coalitional politics will likely pose constraints.
  • Once in government, the Greens will have to keep together a much broader coalition of voters, reaching from center-right pragmatists to clearly left-wing voters.

The Greens are entering the election campaign from a position of unprecedented strength. Meanwhile, their programmatic offering has long been reaching beyond environmental issues, to also include sociocultural ones. With a younger and more homogeneous new middle-class electorate, the Greens tend to take more progressive positions on many of these questions.

However, as they grow electorally, it is the Greens’ vision of economic policy that is becoming ever more relevant. Their manifesto features, among other proposals, higher taxation for corporations and high-income earners, and increased spending on social policy (via a universal basic income), on research, education, digitalization and the climate transition. The Greens also hold overwhelmingly pro-European positions. They support making the EU’s recovery fund permanent, relaxing Germany’s debt brake, and softening the EU’s Stability and Growth Pact.

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In addition, the party is particularly ambitious on public investment. It has pledged EUR 500bn in additional public investment over the next decade in Germany, to ensure funding for climate protection, infrastructure, health care and education. However, these plans raise questions about existing debt brake rules, which limit new borrowing to 0.35% of economic output. The Greens’ plan for reforming the debt brake would require constitutional change, which is only possible with a two-thirds majority in both houses of parliament. The CDU/CSU is unlikely to support this in the short term. The liberal FDP – another possible coalition partner – rejects not only a relaxation of the debt brake but is also skeptical of tax increases, while the Social Democrats remain divided on fiscal policy. A departure from the “black zero” policy of balanced budgets might be a more realistic option in the short term.

Risky centrism?

Ironically, the prospects for a quick end to fiscal orthodoxy are also being questioned by the Greens’ electoral success. Over the past years, several regional elections have shown that the Greens have made inroads into the centrist parts of the Christian Democrats’ electoral base. According to a recent survey, one-quarter of CDU/CSU voters say that they could eventually vote for the Greens. This number is even higher among SPD voters. The Greens are also an appealing option for a significant part of the post-communist Left’s electorate. Their new, central position is further exemplified by regional politics. The Greens are part of 11 out of the 16 regional state governments and have formed coalitions with all the larger parties (CDU, SPD, FDP and the Left), only excluding the far-right AfD.

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But in terms of policy, this success poses risks. After the September polls, the Greens will have to keep together a diverse electoral coalition with potentially divergent policy preferences, including on the spending-tax mix. For instance, former Christian Democratic voters who switch to the Greens might be wary of big spending plans and, most importantly, the major tax hikes these might require. Any Green push for a more investment-friendly fiscal policy could, therefore, be constrained by divisions within the Greens’ own new voter coalition. Whether the party’s experience with a traditionally rather heterogeneous membership can be an asset in this context, remains to be seen.

What do voters expect?

Overall, fiscal policy and European integration hardly seem to be the most pressing issues for voters — not even for Green supporters. Only among FDP voters is there a large share (about 60%) pushing for changes to tax and fiscal policies. Voters rather demand policy shifts on issues such as the environment, climate protection and the housing market. The issue of migration also remains important and could once again come to the forefront given the recent increase of migrant arrivals in Southern Europe. Green voters are focused on environmental and climate protection, digitalization, the housing market, and education. The (potential) problem is that reforms in these areas would most likely require substantial public investment and, ultimately, higher tax revenues. The tension with an overall limited desire for changing fiscal policy could create problems for the Greens.

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In the short term, coalitional dynamics might be particularly difficult between the Greens and the Christian alliance if both obtain roughly similar results. On top of this, both a government composed of CDU/CSU and the Greens and a “traffic light” (Greens-SPD-FDP) coalition would represent previously untested combinations at the federal level. The bigger question to watch in the medium term is whether the rise of the Greens is a symptom of fundamental political and social change — or whether the Greens have simply replaced the Social Democrats as the leading party of the center-left.