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The Hidden Charms of a Grand Coalition Der Speigel Online September 19 2005
After the election stalemate on Sunday, everything points to a grand coalition. But can the two major parties reform Germany? And who would lead, Schröder or Merkel?
Could the best thing for Germany be to have both major parties share power? The candidate could not have answered the question any more clearly. A grand coalition? "Won't happen," said Angela Merkel.
That was before the election. Whether her insistence will survive long afterwards is up for debate. What party leaders had vilified only days before the election as a "catastrophe" (Markus Söder, Christian Social Union) or "monstrous" (Ludwig Stiegler, Social Democratic Party) now seems to be the only clear consequence of Sunday's surprising vote. Not that anyone can say who'll be chancellor.
With some distance from the poll confusion, though, the new political reality may not be so bad. German political elites were calling cooperation between the conservative CDU/CSU and the left-leaning SPD a "blockade alliance" or a "paralysis coalition" just a few day ago, but now a few experts are discerning the subtle and hidden charms of a grand coalition. "A grand coalition can also be a grand success," declared Jürgen Falter, a political scientist from Mainz.
How would it work, though? How would the two major parties split up the job of governing? The first advantage the CDU can offer the SPD is a chance to keep its reputation as protectors of the welfare state; so the upshot might be a continuation of Gerhard Schröder's "Agenda 2010" reform package, but without Schröder's name attached to it and without Green accents in energy and environmental policy.
Germany would then have a government that serves its people's need for continuity. Softening the current course of reform -- which the SPD promised to do late in the campaign -- would be just as impossible for a grand coalition as the radical reconstruction of labor and tariff laws recommended by the business-friendly Free Democratic Party. The unions, which had threatened "undreamed-of" mayhem (IG-Metall Chief Jürgen Peters) if the conservative opposition was successful, can safely roll up their flags.
During the last session of parliament, in fact, an informal grand coalition has already cobbled together certain important agreements, like changes to the health-care system, government subsidy cuts, and the infamous welfare-reform bill known as Hartz VI. A real grand coalition would keep moving in the same direction.
It might also improve the Hartz IV package, gently, by ending failed employment measures, and by giving the harsher free-market experiments suggested by the FDP no serious chance. Both the CDU and SPD, for example, have already said during the campaign that older unemployed Germans might not have to be kicked so quickly off welfare.
And there would be no tax revolution: Soak-the-rich schemes like those recommended by the SPD would be just as impossible as radical tax reforms recommended by the CDU's financial expert, Friedrich Merz. Big changes would be out of the question. But it does seem possible that a grand coalition might attempt a fundamental rearrangement of business taxes.
A council of experts has presented a plan to Schröder's cabinet for business-tax reform, so the broad outlines already exist: A trend toward lowering business taxes on the state level would continue on the federal level, to lure more business to Germany. (The thoery is that a job-creating corporation should pay a lower tax rate than the average worker or employee.) Sole proprietors might then get to choose whether they want to be taxed as individuals or as corporations. This idea appeals to CDU politicians like Michael Meister as well as the business-friendly wing of the SPD.
What might dampen the parties' reformist spirit is realizing that too much might weaken their political base. If the SPD goes along with more welfare-cutting initiatives, it will lose votes to the Left Party. If the CDU is seen to sell out small-business owners or high-earning bureaucrats or corporate employees, they'll migrate to the FDP.
For example: Certain conservative reforms suggested by the CDU/CSU during the campaign -- pro-family measures, or partial privatization of nursing-home insurance -- would be unthinkable for an SPD that wants to improve its image as the party of social welfare after the grief of its Agenda 2010 reforms. What has a much better chance of winning is the bipartisan idea of strengthening the welfare system through general taxes, instead of raising specific contributions by employees and businesses. The CDU already suggested this method during the campaign: Unemployment insurance should be lowered by two percent and then paid for by raising sales tax by 2 percent. If the SPD flogged this idea as "bad policy for 35 million people" during the campaign, that can be dismissed as propaganda. Social Democrats have discussed similar plans in the last few months.
Which means that a coalition of the two major parties might govern successfully -- at least for the time being -- if only to fix the most urgent problems, like reconstructing the German social system.
"Grand coalitions are make-shift solutions," says Falter, the political scientist, "but sometimes they're necessary."