Chancellor to Introduce Proposal for Welfare Benefits Reform, Naming Bas as the Proponent
The German government has finalized the budget for the current year, amounting to approximately 502.5 billion euros, which is now ready for approval in the Bundestag. This budget, prepared since late Thursday night, includes significant changes aimed at reforming the citizens' income.
The Union, the governing party, aims to save five billion euros on citizens' income by replacing it with a basic security. This reform is a key point in the coalition contract, and Chancellor's Minister Thorsten Frei has urged a swift approach to its implementation.
The savings can be realised in 2022 through the use of capital market instruments such as citizen funds (Bürgerfonds), as advocated by political parties like the Greens and FDP. These funds are proposed to supplement traditional pension systems and reduce public pension costs.
However, Professor Enzo Weber of the Institute for Employment Research has expressed doubts about the potential for significant savings by reducing citizens' income payments.
Despite the core budget loans of nearly 82 billion euros, additional loans from special funds for military and infrastructure are expected, leading to overall debts exceeding 140 billion euros. The changes made in the budget do not affect the debt.
The House of Representatives' Budget Committee made final changes in a reconciliation meeting, which will be presented today. The budget expenditures are 460 million euros less than the initial federal government plan.
Friedrich Merz, the Federal Chancellor, announced that Union and SPD would agree on the most important cornerstones for such a reform this year. However, there has been no update on this agreement regarding the specifics of the citizens' income reform this year.
The German government is working on the proposal for the reform, with Federal Minister of Labor, Barbel Bas, expected to submit it in the near future. The budget, however, does not include any changes to the citizens' income reform at this stage.
Savings are necessary to reduce the gaps in future federal budgets for the years 2027 and beyond. The reform of the citizens' income is a significant step towards achieving this goal.
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