Reform Politics: Who Pays for the Reforms – and Who Benefits?

Germany's latest reform package, while containing some correct elements, ultimately solidifies the status quo and places the burden on vulnerable groups, according to an analysis in Die Zeit.

The reforms are criticized for largely benefiting those who already possess power and wealth, failing to enact a genuine system change. While adjustments are made to various smaller mechanisms, potentially causing hardship for some, the core structure remains intact. Pension reforms, for instance, continue to shift burdens from the poor to the rich and from the young to the old. A fundamental reform, the analysis suggests, would redefine the equivalence principle, offer better protection against poverty in old age, and distribute burdens more equitably between generations. Introducing a retirement age of 70 with enhanced protection against old-age poverty is proposed as a more socially responsible approach.

The tax system also requires a fundamental overhaul, with a focus on relieving the burden on labor and businesses. Financing these changes should come from dismantling harmful subsidies and increasing taxes on large fortunes, inheritances, and other unearned wealth. Instead, the package offers minor tax relief for middle to higher incomes without clear offsetting measures, while privileges like the company car benefit and tax breaks for diesel fuel persist. A significant weakness lies in the social imbalance, where vulnerable groups are often scapegoated. Employees accused of feigning illness, part-time workers deemed unproductive, immigrants seen as insufficiently integrated, and young people with perceived high expectations are frequently targeted. This policy of suspicion towards the less fortunate erodes trust.

Conversely, those who could contribute the most, the very wealthy, powerful interest groups, and baby boomers with secure claims, are largely spared. This creates an impression that reforms consistently impact those who already have little, exacerbating feelings of injustice, increasing polarization, and fueling distributional conflicts. The primary beneficiaries of this political imbalance are identified as the AfD and entities that profit from crises and conflicts.

The article also points to numerous contradictions and unresolved questions. Tax reductions are modest, with unclear financing. The state incurs new debt without serious discussion about why harmful subsidies are maintained. Additional defense spending, it argues, should be financed through higher taxes and the reduction of economically and ecologically damaging subsidies, not through borrowing. The contradictions are also evident in the 2027 federal budget, where increased infrastructure investments and higher defense spending are deemed correct, but the financing remains problematic.