65 percent of Germany’s economic elite could still see some benefits in a renewed presidency of Donald Trump, according to surveys. Under Trump, however, a systemic shift is taking place at an adventurous speed. Trump’s disruption has begun replacing democratic capitalism with an authoritarian oligarchy in his core territory. The division of the world with Russia is progressing from deal to deal. The transatlantic friendship has been abandoned. We are witnessing the end of the old West. Europe is in distress. It is time to act. Germany is facing a budget crisis. It can no longer avoid fundamentally reforming its debt brake.
The End of the Old West
Many leftists of my generation were often accused of anti-Americanism by the right. We protested against the Vietnam War, criticized the US-supported military dictatorships in Chile, Argentina, and Brazil, as well as their covert and open wars of aggression from Nicaragua to Iraq. Standing up for universal values, human rights, and international law is not anti-Americanism.
However, none of us would have imagined accusing the USA of what became reality under Trump. During his inauguration, Trump not only threatens the sovereignty of Canada, Panama, and Denmark. Regarding Gaza, he aims to expel the native Palestinian population – an act of ethnic cleansing, euphemistically described as the “Riviera of the Middle East.” Leni Riefenstahl sends her regards.
His Vice President, JD Vance, delivers a speech at the Munich Security Conference reminiscent of the AfD, claiming that the real security threat does not come from China or Russia but from regulations on platforms controlled by the “sieg-heiling” Elon Musk. Trump declares that the European Union was founded “to screw the US.”
Trump calls Ukrainian President Volodymyr Zelenskyy a “dictator” who could have ended the war in Ukraine three years ago. This bizarre reversal of victim and perpetrator was no slip-up. On the third anniversary of Putin’s invasion of Ukraine, the USA joins North Korea under Kim Jong-un and the torture regime of Eritrea in voting against Europe and a broad majority of states in the UN General Assembly. In the end, Trump expels Zelenskyy from the White House on live television because the Ukrainian leader requested security guarantees in exchange for handing over Ukraine’s natural resources to US companies. “You are fired,” as Trump used to say in his TV show The Apprentice.
The old West is dead. The mutual transatlantic security commitment no longer holds. Europe is on its own. It must take care of its own security – and Ukraine is part of Europe.
In the 1980s, leftists often chanted: “Out of NATO – into fun.” But the USA’s de facto withdrawal from the transatlantic defense alliance will be no fun. “To keep the Russians out, to keep the Germans down, to keep the Americans in” – the old NATO motto – is history. Europe expects leadership from Germany. And it needs it fast.
Europe in Distress
This will be expensive. Whether Europe needs to raise 500 billion or more, whether that will cost 3.5 or 5 percent of GDP, remains uncertain. What is clear is that this constitutes an “extraordinary emergency that is beyond the control of the state and significantly impacts public finances,” as stated in Article 115(2) of the German Basic Law. Simply releasing the three billion in aid for Ukraine is not enough. Germany is facing a budget crisis.
Declaring this crisis in the Bundestag will not suffice. It is not just about more money for defense and more aid for Ukraine. It is about building a European arms industry for air defense, drones, and surveillance. The practice of 80 percent of European defense spending landing in the order books of US corporations must end.
European sovereignty is particularly based on economic resilience. Europe must retain or even bring back strategic industries. It must catch up in artificial intelligence and cloud computing. This requires investments in maintaining and expanding infrastructure, including power lines, railways, and highways. We need European investment funds.
Putin and Trump want to make Germany dependent on Russian gas again via the reactivation of Nord Stream – only this time, two autocrats would control the gas supply. This must be thwarted. Therefore, decarbonization must not be slowed down but accelerated. We need to transition to electric mobility faster, phase out coal power and gas heating more swiftly. Increased investment in reducing our import dependency through an accelerated energy transition is necessary.
Reforming the Debt Brake Instead of Special Funds
None of this can be achieved with an austerity policy. Yet, Germany’s debt brake breathes the spirit of austerity. We can and must suspend it in accordance with the Basic Law in the short term. Therefore, there is no immediate time pressure – even if declaring a budget crisis is an unpleasant move for a new government. But it makes one thing clear: the tax cuts for high earners demanded by Merz are completely unfunded.
However, Germany’s debt brake must be comprehensively reformed and adapted to new challenges. This also requires a new definition of the investment concept. That demands careful consideration.
A constitutional majority for such a reform exists in the new Bundestag – including Die Linke. The CDU/CSU, however, shies away from this. But those who now seek the seemingly easy path of creating new special funds will only reduce the pressure for a comprehensive reform of financial policy in times of disruption. They will provide the perfect excuse to put everything on the chopping block – from parental benefits to unemployment benefits to pensions – before the CDU/CSU is even willing to discuss debt brake reform. This will massively endanger social cohesion.
Dividing society instead of uniting it does not do justice to the challenges arising from the collapse of the old West.