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Berlin Bulletin: Ghosts of the past - A trauma named Schröder - Coalition transactions

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A weekly newsletter on German politics, with news and analysis on the new government.

By FLORIAN EDER with Gabriel Rinaldi

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'CITIZEN'S INCOME': With the coalition's majority and against the votes of the main opposition, the Bundestag on Thursday passed a bill to transform the basic welfare scheme in place into a "citizen's income." The largest and deepest reform of the welfare state in two decades tilts the focus from fighting mass unemployment, a plague when the current scheme was invented, towards today's scarcity of labor - or so the government says.

Discuss. Criticism relates to a series of provisions that change the balance between rights and obligations in favor of the beneficiaries (not to higher payouts): People can keep their savings untouched for longer, have to obey fewer rules when it comes to housing and have, in general, to fear fewer sanctions. (Which can't be called sanctions, there are only "obligations to cooperate".) That all, critics including practitioners who would have to implement the new rules say, might not help people back into jobs and will result in significantly higher costs.

They'll make it happen: The Bundesrat, the second chamber, has yet to approve the measure, and may fail to do so at its next session on Monday, given the power that the opposition Christian Democratic Union has there. In the debate, it has become clear they won't easily agree. But the political will on the government's side to make the reform pass is there for sure. It's a central campaign promise of Chancellor Olaf Scholz and Labor Minister Hubertus Heil - and it's much more than that, for their Social Democratic Party.

Fighting the ghosts of the past: The bill is all about overcoming the legacy of Germany's last SPD chancellor, Gerhard Schröder. The party "has awakened from a neoliberal euphoria of the late 1990s and early 2000s," said Dietmar Süß, whose expert takes on the SPD stem from profound engagement with the subject as a historian. What happened back then, under the name of the Agenda 2010 reforms, meant making the unemployment insurance scheme future-proof to some - but, said Süß in an interview, a "delegitimization of welfare-state policies" to many in the party. Read on.

SOCIAL DEMOCRATIC AFFAIRS

PUTTING THE SOCIAL BACK IN: The SPD has recognized, said Süß, that the Schröder-era reforms known as Hartz IV, "in which the party itself played a decisive role, was a political-historical mistake that it is now correcting." The new "citizen's income" is about much more than raising rates of social transfers, although that will mark a main difference for beneficiaries. "For social democrats, the citizen's income is about being able to accentuate a fundamentally different relationship to the welfare state," said Süß.

Key term: "Scholz would certainly not put it this way ... But at the party congress before the Bundestag elections, you could see how much of a sigh of relief it was to have found a new language, a new feeling for what constitutes the 'social' for social democracy."

Meet this week's Bulletin interviewee: Dietmar Süß holds the chair for modern and recent history at Augsburg University. An astute observer of the party, an expert on the labor movement's history as well as supporter of Schalke 04, the German football club that stands for workers' culture more than any other, he has just published a book about the SPD's " Strange Victory " last year and its comeback to the chancellery. He is, in short, best positioned to help us understand what keeps the chancellor's party going.

A TRAUMA NAMED SCHRÖDER: Pundits are calling what the SPD is going through "trauma recovery." Asked whether that's not making it all a bit too easy for the party, Süß agreed: "After all, it is the Social Democrats themselves who willingly, and in the vast majority, agreed to Schröder's policy - especially since it should not be shortened to cuts in welfare state benefits only. This would be misleading," he said. It was, and is again now, "about a reassessment of what the individual has to contribute."

New era: The SPD-led Agenda reforms - a certain Olaf Scholz was the party's last secretary general under Schröder - "have become a negative Social Democratic memory," said Süß, one that ultimately stands for the way in which the SPD has "increasingly distanced itself from important groups of supporters, and from a positive relationship to the welfare state." In retrospect, it might have given the country's social contract a badly needed makeover back then - but it didn't pay off politically for the SPD, as Süß put it: "It was a painful process, also in view of the losses the party has suffered in the years since, particularly among its core constituency."

Why care about the party's soul searching: "Politically, one of the very big problems of Agenda policy for the SPD was that it enabled political competition from the Left," said Süß. When major parties end up between 20 and 25 percent of the votes, the single-digit voters of the Left are not to be neglected: "That's why the citizen's income, if it can be implemented, will be a social policy success, but also an important symbolic success, one that will have to sustain social democracy for a long time."

GAZRPOM GERD: Getting some distance from Schröder's most-criticized legacy hasn't been as easy. But it would be unfair to say that the whole party has a Russia problem, argued Süß. "In parts of the SPD, people have looked the other way for far too long, and with regard to Gerhard Schröder, every form of moral scruple has fallen away," he said. But: "The picture within the SPD is much more heterogeneous than it appears to the outside world. The voices within are more complex," he said. "My impression is that quite a distorted picture has emerged of all Social Democrats being close to Russia and bought by Gazprom. This is not appropriate."

It's the history: "If you want to understand where people like [Bundestag group leader] Rolf Mützenich got their imprint, it's not that they think Putin is great - it's about a certain interpretation of postwar history. You don't have to agree with that, but it's not enough to infer political blindness from it. My impression of the debates within the SPD is that it does not differ too much from the CDU and CSU in the contradictions of the entire Russia policy of the last 30 years. That doesn't make it any better, but it also doesn't make it a specific feature of German social democracy."

Scholz, the Social Democrat: Olaf Scholz, during his term so far, "has not been able to give this coalition its own social democratic language," said. 'Respect' was the central term of Scholz's campaign last year. It "accentuated a particular form of life achievement in East and West Germany" and more broadly promised to re-define fairness and social justice - but Scholz lost that special tone, the sound of the campaign that made him chancellor, said Süß.

TAKE ONE STEP BACK: Last year's victory, "measured against initial expectations, was an amazing comeback," said Süß. "When Scholz was nominated, in a somewhat bleak atmosphere, nobody was betting on the SPD. There was a debate about whether it wasn't even inappropriate to put forward a candidate for chancellor" - in light of the party polling at around 15 percent, only months before election day. The success was unexpected back then by most (Scholz claims he knew all along he'd make it): "But the election victory has done more to gloss over the structural problems of social democracy than to solve them," said Süß.

Can he do it again? " The SPD has long lived in hubris and believed, just as parents believe about their lost children, that the Greens would eventually return home. This paternalistic feeling has certainly helped to underestimate the Greens - and prevented the party from seeing the competition with them as a central task," said Süß. "That avenges itself, as the balance of power between Social Democrats and Greens can also change in the future."

Green advantage: "It is a major strategic mistake for the SPD to have a massive programmatic deficit on climate and energy policies," said Süß. "That's sad, because the SPD was already much further ahead in the 1980s and 1990s." And it's risky: "The marginalization of environmental politicians in the SPD is one of the most dismal elements and a major strategic omission," he said. "They weren't able to integrate a whole cohort of politicians, who finally all went to the Greens. The SPD lacks the generation of [Vice-Chancellor] Robert Habeck and [Foreign Minister] Annalena Baerbock."

COALITION RELATIONSHIP STATUS

ASK AND YOU'LL GET ANSWERS: It's been a while since the German Council of Economic Experts last surprised the government that it is meant to advise. An ally for finance ministers of any political color with its calls for spending discipline and a stronghold of the classic ordoliberal school of economic thinking, its annual recommendations have rarely stimulated much debate. It went quite differently this year.

Uncomfortable advice: Finance Minister Christian Lindner found a recommendation in the report to postpone his key inflationary compensation measure this fall to dampen the so-called "cold progression" in the income tax system. The expert council concludes the measure risks driving inflation rather than cushioning price pressures. (They assume, for some unknown reason, the state would not spend, but bank the extra money stemming from that tax spike).

Irritated Liberals: The report also invites the government to consider a "strictly time-limited energy solidarity surcharge for top earners" - another tough piece of advice for Lindner, who has excluded any tax increases for the whole term in office. The last time such an extra tax was introduced was 1991. It was also meant to be strictly time limited, to one year, but has yet to be fully abolished.

One for everybody: Social Democrat and Green politicians accepted the kind invitation the experts council handed to them - some of them perhaps before reading through the whole report: The experts body also asks the government to examine whether it is possible to extend the lifespan of the remaining three nuclear power plants beyond April 15 next year, reopening a debate that the Greens have declared over.

Deal? Lindner, in a podcast this week, pulled away the curtain and offered plain sight on how politics function: "I would be ready right away to say we'll do a speed limit in Germany, if the nuclear power plants run longer," he said of give and take and the transactional nature of any coalition.

Now read this: Experts and politicians may indulge the luxury of bickering about whom to tax next - the energy crisis could be much more dramatic: It might be the starting point for a deindustrialization of the country. My colleague Johanna Treeck has this report.

COMMENTARY BOX

MOTHER OF ALL ELECTIONS? The U.S. midterm elections have provoked different reactions on the German opinion pages. Some told you so, some were relieved, and others seemed outright disappointed about the lack of drama.

Nothing to see: "Where has it gone, the 'red wave' that was supposed to sweep the U.S.?", wonders Claudia Kramer-Santel in the Westfälische Nachrichten. Admittedly, she argues, many of the decisive races were very close. Nevertheless, "the 'red wave' turned out to be a relatively harmless trickle, flushed with a lot of 'blue' from the Democrats."

A referendum on Trump: The election result was not a memento mori for Joe Biden, opines Thomas Spang in the Heilbronner Stimme. To him, it was rather a referendum on Donald Trump: "Voters have clearly told him that they are not interested in his return to the limelight and, outside Republican strongholds, have little taste for candidates who question democracy, deny Covid, pay homage to the QAnon cult, take radical positions on abortion or fantasize about population exchanges at the expense of white America."

Dangers for democracy not averted: "The dampening of Trump's personal ambitions is admittedly not synonymous with the end of his triumphant march through the Republican Party and the country's institutions," writes Dorothea Hahn, much more cautiously, in the tageszeitung. After all many of his candidates have been elected: "Their presence at all elected levels is a guarantee that Trump-style confrontations in the U.S. Congress will increase in the future and that the dangers to democracy in the U.S., especially at the state level, are by no means averted."

' Supervised governing': Gabor Steingart notes in his ThePioneer Briefing that Biden did not win: "The Democrats just did better than expected. They beat the pollsters, but not the Republicans." Voters, Steingart wrote, are out to limit the president's power to push through his legislation on Capitol Hill. "The rest of his term is likely to be one of supervised government."

Trumpism is alive: "Any Republican president in the future will be carried by a party that, across large segments, casts doubt on the DNA of American democracy," writes Friedrich Roeingh in the Allgemeine Zeitung from Mainz. Trumpism, he argues, is alive and well. "The fact that the midterm elections did not turn into the predicted Trump celebrations will not dissuade the aggrieved man from his plans to recapture the White House. To the contrary."

Flower sponsor: On his way to the G20 summit in Indonesia, German Chancellor Olaf Scholz will stop by in Vietnam and Singapore, on Sunday and Monday, accompanied by a business delegation. In Singapore, he will attend the 17th Asia-Pacific Conference of German Business. More importantly, there will be a so-called orchid ceremony: As is customary for high-level guests, a new orchid species will be named after Olaf Scholz, according to a government official.

What about domestic security? Interior Minister Nancy Faeser discusses the role of domestic security in the Zeitenwende. The German Council on Foreign Relations' event takes place on Tuesday.

Digital cities: From Tuesday to Thursday, the " KommDIGITALE " congress in Bielefeld expects some 125 events as it will focus on municipal digitalization.

Poverty-related crimes: On Thursday, the Left's Bundestag group debates how a novel approach to poverty-related crimes could look like, asking whether we live in a "class justice system". Among the panelists are former party chairwoman Susanne Hennig-Wellsow and activist Arne Semsrott.

A bit rich but that's Berlin: The "plurisciplinary approach of the conference embrace the components of the system: Politics, international and national law, businesses and entrepreneurial iniatives," and so on - we're talking a conference on fashion on Thursday with senior government officials in attendance.

Against hate speech and disinformation: The Greens group in the Bundestag organizes a conference on Friday, where it will discuss strategies against conspiracy ideologies and disinformation. Participants include politicians Konstantin von Notz and Marina Weisband as well as authors Pia Lamberty and Katharina Nocun.

THANK YOU: To Hans von der Burchard and Tristan Fiedler who contributed reporting, my editor Douglas Busvine and producer Giovanna Coi.

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