November 11, 2019
Grand coalition agrees to continue grand coalition
You can always tell when a political body becomes dysfunctional: they start kicking the can down the road. This is what the European Council or Germany's grand coalition have in common. But one should not underestimate those bodies in terms of their ability to reach compromise. We never bet against the European Council finding a last-minute agreement. They are rather good at this. And so is the grand coalition. They had a big political disagreement over a minimum guaranteed pension, and yesterday they reached a compromise. The reason is pure self-preservation. Neither party is ready for the coalition's end, which would have happened if this deal had not been reached.
Annegret Kramp-Karrenbauer is carefully plotting an alternative post-Merkel agenda for her party, but she does not have enough support at this stage. She is among the lowest-ranked German politicians. The compromise will help the likes of Olaf Scholz and Heiko Maas to hang on their ministerial jobs for a little longer, and will boost the chance of Scholz and his co-candidates in the upcoming SPD leadership election. For the party's ageing membership, the minimum pension is a big deal. It might be what swings the vote. We reported on a poll in which the Scholz team was trailing but that poll is already a few weeks old - and the SPD's entire establishment is behind Scholz. We would not bet against him, but we don't think he will arrest the decline of his party.
The compromise reached by the coalition is to limit the minimum pension to those who made 35 years of contributions to the pension scheme. There will be no generalised means testing as the CDU/CSU previously demand, only a simple income test - done through a data exchange between the tax office and the social security office. There are several other components of this deal, but it is no doubt a big win for the SPD.