Olaf Scholz can leave for the summer break in good spirits. The Social Democrat is the most popular politician in Germany, according to a ZDF political barometer. His strategy, so far, seems to be paying off: Mr. Scholz presents himself as a trustworthy minister grounded in solid finances. In typically northern German fashion, the former Hamburg mayor keeps his cool and seems unperturbed by the chaos around him.
However, Mr. Scholz has yet to set his own priorities. It was only recently, with pensions, that he drove a stake into the ground. In his opinion, pensions must remain stable in order to prevent the rise of a German version of Donald Trump. This was Mr. Scholz’s first signal to his own troops that he is not only the country’s finance minister, but also a Social Democrat.
Beyond that, Mr. Scholz continues to unwaveringly follow Wolfgang Schäuble’s path, for better or for worse. It is good that Mr. Scholz, like his illustrious predecessor, is pursuing a stable fiscal policy. However, what is bad is that he is failing to address looming imbalances in the federal budget. The shining façade of the “black zero” — Mr. Schäuble’s sacrosanct balanced budget — is papering over gaping cracks.
A recent study by the Ifo Institute again highlights how little Germany invests compared to other countries. Instead of gearing up the education system, infrastructure and health care for the digital revolution, more and more taxpayers’ money is funding social initiatives.
To make matters worse, Europe’s largest economy cannot fully use the resources it has allocated to investment, even though they’re modest by international standards. This is partly because Germany’s construction authorities have long been understaffed, to name one notorious bottleneck.
Therefore, Mr. Scholz not only needs to increase state spending, but he should urgently ensure the funds available can actually be spent in the first place. Thriftiness may be enough to boost a finance minister’s German popularity, but it would be in the country’s best interest to finally put some of that savings stockpile into additional investments.
Martin Greive is a correspondent in Berlin. To contact the author: email@example.com.