Merkel during her speech to the Bundestag on Tuesday
Chancellor Angela Merkel showed a noticeable shift in style when she outlined the government program for her second term in a statement to parliament on Tuesday. The cautious "Mom" of the nation had now become a high-stakes gambler willing to risk a fiscal debacle in her bid to get Europe's largest economy growing again, observers said Wednesday.
The chancellor made plain in her unusually punchy hour-long speech to the Bundestag that Germans have yet to feel the full impact of the economic crisis, that the country faces its biggest challenge since unification in 1990, and that it can't take its economic dominance for granted because the crisis may radically change the balance of power in the global economy.
On Monday, Merkel's cabinet had agreed to Germany's third economic stimulus program in a year in the form of a "growth acceleration law," an €8.5 billion ($12.8 billion) package of tax cuts for companies, hotel owners and company heirs as well as increased child benefits.
Merkel plans a total of €22 billion in tax cuts next year and is planning further relief in 2011, even though Germany's federal budget deficit is projected to balloon to €86 billion in 2010. She rejected opposition calls for spending cuts to tackle the growing government debt, saying this would choke off the tentative recovery.
Merkel's Tuesday speech revealed an almost brazen courage rarely shown by a German leader since World War II, commentators wrote in the Wednesday editions of Germany's main newspapers. However they also warned that Merkel's plan to cut taxes, instead of boosting economic growth, may simply drive up government debt to barely manageable levels.
The business daily Handelsblatt writes:
"Angela Merkel has often been mockingly described as the 'Mom' of the nation who could never hold a blood, sweat and tears speech. Yesterday she started proving the opposite. The chancellor's rhetoric had a sobering effect because she openly expressed something that is starting to dawn on many people: that we will spend a long time dealing with the consequences of this crisis."
The left-leaning Berliner Zeitung writes:
"Angela Merkel has already lived through the most pleasant days of her second term: an honorable appearance before the US Congress where she held a very personal and moving speech, then the opulent festival celebrating the 20th anniversary of the fall of the Berlin Wall, with Bon Jovi and world leaders. It was nice, but the party's over. In her government statement, Angela Merkel gave a precise account of the problems facing this country. No one can accuse the chancellor of embellishing the situation. She prepared the Germans for the possibility that things could get worse.
"She spoke quite well. But her good delivery didn't conceal the weaknesses of what she was presenting. Cutting taxes, investing in the future and restructuring the state finances all at the same time simply defies the laws of arithmetic. It simply can't work."
The conservative Frankfurter Allgemeine Zeitung writes that Merkel's message on Tuesday was "don't be surprised if we don't have any successes before 2011."
"Has there ever been more resignation at the start of a new term? That question is misleading. For weeks, Merkel has been working on her re-election in 2013. If you make sure that people have no illusions about the future right from the start, you have a better chance of being feted for successes further down the road, even if they're small. If the government fails to deliver on its election promises as a result of the crisis, that will do more harm to the FDP, which promised the electorate more, than to the CDU." (Editor's note: The pro-business Free Democratic Party is the junior coalition partner to Merkel's conservative Christian Democratic Union party.)
The center-left Süddeutsche Zeitung writes that Merkel is more willing to take risks than she was at the start of her first term four years ago:
"You could sense that in her tone and in what she said. The CDU chairwoman who once resembled a friendly schoolteacher aims to reinvent herself as a leader who has the courage to undertake risky experiments. She is making a gigantic gamble without knowing if it will pay off. Anyone who was worried that German politics will be boring in the coming years can be pleased: Merkel has put on new clothes and is getting into the boxing ring. That applies in particular to the biggest problem facing Germany in coming years, the gigantic national debt.
"Merkel has wiped the idea to cut public spending off the table as if it were an annoying speck of dust. She's putting all her faith in economic growth, is cutting taxes to achieve that and is postponing debt reduction. That can succeed but it can also result in a fiscal debacle. Merkel herself admits she has no idea whether it will work. Rarely has a German government leader shown so much chutzpah."
-- David Crossland
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