Mutt and Jeff

Jobless insurance highlights ‘rivalries over issues’ culture in Berlin

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Contrasting figures. Source: AFP

At first sight, Germany’s top cabinet members Peter Altmaier and Olaf Scholz look like Mutt and Jeff, the zany comic strip pair that amused American newspaper readers for nearly 80 years. Towering Mr. Altmaier plays Mutt, and the diminutive Mr. Scholz is Jeff.

But with the ministers of economics and finance respectively squaring off against each other again and again, they look more like Tom and Jerry, trapped in a cartoon of constant confrontation.

So when Mr. Scholz trotted out a plan Tuesday to create an unemployment insurance fund in the European Union, Mr. Altmaier was quick to shoot it down. When Mr. Scholz left Berlin to attend the annual meeting of the International Monetary Fund in Bali last week, Mr. Altmaier released a 10-point plan to provide tax relief for companies. Mr. Scholz, who had preemptively warned against any tax plan that would contribute to a deficit, was quick to reject it.

Political points

These schemes and plans have little to do with insuring unemployment or providing tax relief, and more to do with the two parties bound reluctantly into a grand coalition trying to throw their political profile into greater relief. Nor is it a surprise that it takes the form of a conflict between these two men, who both have ambitions to head the government.

For Mr. Scholz, it was important to take some time off from playing a bigger, badder wolf than his hardline predecessor, Wolfgang Schäuble, on limiting government spending. And drawing up a plan for an unemployment fund is a lot more in line with his center-left roots. The finance minister is not really responsible for unemployment in Germany, let alone in the EU. However, with his other hat as vice chancellor, Mr. Scholz cuts himself some slack.

Bundestag – Regierungserklärung
Olaf, Olaf, Olaf. Source: DPA/Kay Nietfeld

Similarly, Mr. Altmaier’s plan for tax relief was well outside his brief as economics minister, but as Chancellor Angela Merkel’s confidant and sometime proxy, he also takes considerable liberties with his portfolio.

Neither of these ventures was designed to produce legislation. Often it seems like there are two different governments coexisting in Berlin, each with its own goals and neither interested in getting much done.

Public anger

But this kabuki theater is making business, labor and the broader public increasingly unhappy. The inability of the two coalition partners to come together on most significant issues means they may be facing each other in a new election well before the current legislative term ends in 2021.

The confrontation between the two ministers means the debate on issues gets short shrift. Mr. Scholz’s proposal for an insurance fund is an attempt to make good on Germany’s pledge to bring Europe closer together by allowing a rich country like Germany to lend money to a poorer country with a higher jobless rate if its unemployment insurance runs out.

But the German public is allergic to anything that smacks of hardworking German taxpayers bailing out indigent foreigners, and Mr. Scholz knows this. So he tried to sidestep that issue by saying these loans would be paid back in full when the country’s economy recovers. Many Germans would view that with skepticism.

Ms. Merkel and her Christian Democrats are categorically opposed to mutualization of debt or transfer payments, all their lip service to European solidarity notwithstanding. So it was no surprise that Mr. Scholz’s proposal was rejected out of hand. The concession Ms. Merkel made to French President Emmanuel Macron last summer for a euro-zone fund for investment and convergence is as far as she is ready to go with common European funds.

So there may be two rival governments in Berlin, but there is still only one chancellor. As long as she holds on to power, Ms. Merkel will have the final word.

Several Handelsblatt reporters contributed to this article. Darrell Delamaide, a writer and editor for Handelsblatt Global in Washington, DC, adapted it into English. To contact the author: d.delamaide@extern.handelsblatt.com

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