Government pledge

"We want to lead the country out of the crisis to a new beginning in a new decade," says the preamble to the coalition contract that the Christian Democrat Union and the Free Democratic Party agreed after three weeks of tough negotiations. But how this is meant to work remains vague, and is apparently based mainly on hope - the hope that the economic cycle will turn, that the economy will recover quickly, that new jobs will emerge, and that the mountain of debt will be reduced.

But these are illusions rather than hopes. One thing is already certain: If the new government implements its program, the state's debts will increase further. Tax breaks worth 24 billion euros ($36 billion) a year are set to be introduced on Jan 1, 2010. But Angela Merkel has categorically ruled out rises in taxes like the sales tax.

Where is this money meant to come from? While presenting the coalition contract alongside Horst Seehofer, leader of the CDU's Bavarian sister party the Christian Social Union, and FDP chairman Guido Westerwelle, Merkel confined herself to rather vague phrases.

"We want to walk the path of growth," she said at the press conference in Berlin, "We have to think dynamically." People should get more net income out of their gross income, and hard work should be rewarded again.

But whatever the government wants to put in one pocket, it will have to pull out of all the other pockets. The financial relief and extra burdens involved can hardly be balanced. The planned reform of the healthcare system shows in what direction this is heading: social security will be increasingly privatized, the principle of a mutually supportive insured community will be compromised.

The planned restructuring of the health insurance system, due to start in 2011, requires that any future increase in contributions will be paid for by the employee, not the employer. On top of this, people will be legally obliged to take on additional private long-term care insurance.

This will please insurance companies - they will get millions of new contracts. But a shudder might go through those who pay insurance premiums when they think of the millions of pensioners in the US who were plunged into poverty by the financial crisis and the recklessness of insurance companies after having paid into funded pension insurance systems.

So does this represent a permanent switch from the German contribution system based on fiscal parity to an American-style capital funded system? Will the re-structuring of society, begun under former Chancellor Gerhard Schroeder's center-left government and continued under Merkel's grand coalition, finally be cemented? Will the redistribution from the bottom up, a process that has incontrovertibly happened in the past few years, be continued?

The coalition partners who cheerfully sat before the press on Saturday morning carefully avoided any impression that their government would be one of social neglect. They believe in social justice, they said, and they want to remove all remaining social inequalities. These are the promises with which the CDU-FDP coalition has entered government. Now they must be measured on how they honor these promises. We can only hope for an effective opposition.

Bettina Marx is a Deutsche Welle reporter. (bk)
Editor: Chuck Penfold