February 21, 2017
Schulz to undo Schroder’s Agenda 2010
We are taking Martin Schulz’ candidacy in Germany very seriously, not because of the polls but because he is the only SPD politician who can credibly distance himself from the Grand Coalition in Berlin as well as from the SPD’s own unpopular reform programmes of the previous decade. We know that he only became the SPD’s chancellor candidate by accident - the decision by Sigmar Gabriel not to put himself forward after he realised that he didn’t stand a chance. But that does not detract from the fact that the SPD has the most potent candidate since the early Gerhard Schroder.
His critics say that Schulz is full of hot air, and would implode when forced to unveil his programme. We think they are complacent. Schulz did produce a big bang yesterday, during a trade union junket in Westphalia, but it was not an implosion. He pledged to abolish most of the stinging bits of Gerhard Schroder’s Agenda 2010 reform programme, which was hugely unpopular among SPD voters, and which cost the SPD the 2005 elections. The party has since fallen from a high in the low forties to just 20% under Gabriel, but has now recovered to over 30% in the polls under Schulz. The Agenda 2010 was the big symbolic issue for the SPD, and Schulz is taking it back. No other SPD candidate could have done it because they all have blood on their hands.
Schulz specified yesterday that he wants higher pay for the unemployment and for pensioners, including a statutory minimum pension. He wants to strengthen co-decision rights of workers in companies, shorter working hours, and free childcare in companies. And he wants to crack down on temporary work contracts, and restrict them only to situations where temporary contracts are plausibly justified by the employers. Schulz said that the SPD had made grave mistakes by aligning itself with the neoliberal mainstream.
The papers celebrated the return of confidence to the SPD. Die Zeit quotes one SPD official referring to Schulz as the St Martin of his party. Jasper von Altenbockum, the FAZ’s political columnist, who is no friend of the SPD, acknowledges that Schulz’ strategy is logical. What does he have to lose? His opponents will accuse him of paving the way for a coalition with the Left Party, but people will make that point in any case. He might as well go on the attack now and secure the initiative. He wonders what Angela Merkel can do to stop him. Both politicians are hard to read, he concludes.
Even if Schulz only implements parts of these promises - and there is no way he will be able to implement all of them - it will nevertheless have an important impact on the German budget deficit in the long run. We know that the German debt brake is not water-tight. Its importance does not lie in its legal foundation, but in the overwhelming support it enjoys. We have no doubt that a Schulz-led government would test the limits of the debt brake. By incurring a fiscal deficit, Germany's current account surplus, which we consider the single most toxic imbalances in the eurozone right now, would diminish. We would prefer a strategy focused on public sector investment, rather than handouts, but this is still better than the current government's strategy of allowing fiscal surpluses to build up.