Unveiling the CDU's "Agenda 2030": An In-depth Analysis by Economist Südekum
Unveiling the CDU's "Agenda 2030": An In-depth Analysis by Economist Südekum
The CDU is kicking off the intense phase of the federal election campaign with their "Agenda 2030" program, promising financial relief for corporations and individuals, leading to notable growth rates. The proposed plan aims to achieve a two-percent economic growth target for Germany, as stated in the 12-page draft.
Economist Jens Südekum raises concerns about the CDU's tactic, alleging a lack of novelty in their approach. Similar to their election manifesto, the CDU paper promises substantial tax reductions without outlining the financial source for these cuts. Südekum, a distinguished professor of international economics at Heinrich Heine University in Düsseldorf, as well as a member of the Federal Ministry of Economics and Energy's scientific advisory board and the SPD, voices this critique.
The draft mentions that significant funds will be freed up in the federal budget due to the allocation of citizens' money to a new basic security and a more robust migration policy. Periodic reviews are suggested to scrutinize expenditures, especially subsidies that have escalated significantly during the "Ampel years."
The CDU paper omits any definitive stance on rejecting or endorsing a possible debt brake reform. It merely emphasizes commitment to the debt brake embedded in the Basic Law and maintaining a policy of solid financial management.
Previously, Südekum calculated that the CDU's election program would result in a 100-billion-euro hole in public finances. According to him, the limited savings potential from citizens' money is insufficient to close this gap. Südekum expresses serious reservations about the program's feasibility, which heavily relies on hope rather than realistic expectations. To finance the tax reductions, the reforms would need to foster around a ten-percent GDP growth.
The Agenda paper has an intriguing sentence – implementation will be phased in annually, commencing on January 1, 2026. In contrast, the election manifesto only mentions "gradually" reducing income and corporation taxes. Südekum speculates that to achieve a two-percent GDP growth, additional 2.5 percent GDP growth would be required in 2026 to finance the promised tax cuts. With strategic spending reductions in areas like citizens' money, immigration, and administration, possibly even two percent would be sufficient, Südekum suggests.
Südekum suggests that the CDU might have overlooked an essential aspect: the uncertainty surrounding whether the proposed tax reductions, initially appearing modest due to gradual implementation, will truly trigger a 2-percent additional GDP growth. He further criticizes the discordance between promising massive tax cuts and maintaining the debt brake.
The CDU, despite criticisms from economist Jens Südekum about the lack of novelty in their approach, continues to emphasize their commitment to the debt brake and solid financial management in their "Agenda 2030" program. The program relies heavily on achieving a two-percent economic growth target, which according to Südekum, may require an additional 2.5 percent GDP growth in 2026 to finance the promised tax cuts.