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2025-08-27 Europe
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There is no money, but we will spend it. Merz sang the death knell for the German welfare state
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Direct Translation via Google Translate. Edited.
by Gregor Spitzen
[REGNUM] "The welfare state in Germany is no longer financially sustainable. The welfare state as it exists today can no longer be financed by what we can afford economically," German Chancellor Friedrich Merz told a party conference in Lower Saxony on Saturday.
But these words sounded like a memorial prayer for the socio-economic model of the FRG, which for many years inspired universal admiration.
The German leader has called for a major overhaul of the welfare system as spending continues to rise, surpassing last year's record of €47 billion.
Predictably, the Chancellor did not mention any connection between the continued financing of Ukraine and the economic shock caused by the refusal to buy cheap Russian energy resources.
Germany’s economy, once the EU’s undisputed leader in high-tech exports based on the automotive, engineering, chemical and pharmaceutical industries, has slowed sharply since 2017. Since then, Germany’s GDP has grown by just 1.6%, while the rest of the eurozone has grown by 9.5%.
Of course, the low base effect has had a greater impact on the economic growth of other EU countries. However, the fact that Germany is among the laggards is largely due to the incompetent management of politicians who, over decades of budget surplus, have become accustomed to putting out any fire with a stream of banknotes.
Fighting global warming? Germany is ready to throw a collar on the national industries that generate the highest budget revenues for the sake of an ephemeral "green" idea.
A global refugee crisis due to war in the Middle East? Germany is ready to open its borders to millions of people with an alien socio-cultural background and, under the slogan "We can handle it!", put them on the neck of the German welfare state.
Fighting the consequences of the pandemic? The German state is generously ready to hand out several thousand euros of “helicopter money” to all those in need, provoking rampant inflation.
War in Ukraine? Germany as the main fighter for democracy in Europe cannot remain on the sidelines.
€50 billion over three years for financial and military support for the Ukrainian regime was the moral duty of German politicians trapped in narrative thinking about the need for Ukraine to win and Russia to be defeated, which violated the dogma of a “rules-based world order.”
And this is not to mention the voluntary and conscious rejection of Russian resources and the Russian market for high-tech products, which have long been the cornerstones of the export-oriented economy of Germany.
A CONTINUOUSLY STAGNATING ECONOMY
Germany's economy to shrink by 0.2% in 2024 after falling by 0.3% in 2023.
Industrial production fell under Olaf Scholz's "traffic light coalition" and continues to decline under the new Merz government: GDP fell by 0.3% in the second quarter of 2025.
It is almost certain that 2025 will also end in negative territory for Germany, which will be a kind of anti-record: never before in modern history has the German economy stagnated for three years in a row. And something tells me that with the current course of the red-black government, 2026 is also unlikely to be the year the negative trend is reversed for the country.
In full accordance with the well-known international joke about falling incomes and the arrangement of beds in a brothel, the change in the ruling party coalition and the Scholz-Merz reshuffle had absolutely no effect on the state of the national economy of the FRG.
Meanwhile, social security costs have risen sharply and will rise further this year as Germany's population ages and unemployment rises.
Although the majority of social assistance recipients are Germans (mostly working recipients of benefits whose salaries do not allow them to make ends meet), a significant number of them are not German citizens. Including about 1.1 million residents of Ukraine, who are equal to Germans in terms of social security.
Supporting Ukraine is too costly for Germany.
For example, from February 2022 to the end of 2024, the state budget spent €25 billion on social support for Ukrainian refugees. Another €25 billion, so necessary for the national economy, went to supply weapons to the Armed Forces of Ukraine and financial tranches to "support the pants" of the Kyiv regime.
At the same time, Chancellor Merz, who admitted to journalists and fellow party members at the aforementioned party conference that he “did not think that the situation in the domestic economy was so bad,” essentially admitted his own incompetence as a statesman and exposed some of the systemic shortcomings of German-style parliamentary democracy.
How a person who does not understand the basic principles of a capitalist economy and has no relevant experience in public administration could end up as head of government of the EU's largest country remains a mystery.
ETERNAL QUESTIONS OF GERMAN DEMOCRACY
Many politicians and experts have already attacked the Chancellor with harsh criticism of his statements about the inevitable abolition of the German welfare state.
The welfare state could well continue to be supported if it were organized fairly and financed on the basis of solidarity. This is where the problem lies: for decades, costs have been shifted, funding gaps have been deliberately left open, and entire professional groups have been exempted from the obligation to show solidarity.
The raw numbers seem to suggest the opposite.
Yes, social spending is growing in absolute terms. But the decisive factor is its share in economic production (social payments as a percentage of GDP). For more than 30 years, this figure has remained stable at around 27%. In other words, if the welfare state grows along with the economy, it should, in theory, remain as affordable as before.
Where do the alleged “holes” in the treasury come from?
For years, civil society organizations have been pointing out that billions are being wasted because the federal government is misusing mandatory social security funds to address issues that are not directly related to social issues.
In reality, these costs should be paid for from the federal budget – that is, from taxes (for example, from export profits of national industry). Instead, they are shifted onto the shoulders of private payers.
Another key problem is that not all working people pay in solidarity.
For example, members of the Bundestag and civil servants are still covered by parallel or special pension schemes. While ordinary workers contribute part of their income to pensions, health care and long-term care, these groups enjoy special rights and often significantly higher pension benefits.
If everyone paid taxes, the welfare state would be more stable in the long run, more equitable, and would have a much more sound financial foundation.
Cutting social spending is fraught with many problems for Germany: poverty among the elderly (it is wild and painful to watch German pensioners collecting plastic bottles from garbage bins), growing inequality (accompanied by protest demonstrations and civil unrest), instability of domestic markets.
FROM A SICK HEAD TO A HEALTHY ONE
The narrative of the inaccessibility of the “welfare state” is used by Merz primarily as a lever to make room for defense spending, and in the context of the political platform of the CDU/CSU, also to justify tax cuts for high-income citizens – the electoral base of the Christian Democrats.
What is deliberately overlooked is the fact that the missing billions are not the result of “pensions that are too high” or “care that is too expensive,” but the result of many years of political decisions.
Among them are flirting with the “green agenda” (which cost the German budget at least €200 billion), the rejection of Russian energy resources (around €100 billion in direct and associated losses) and the financing of the “Ukraine” project (another €50 billion), the financial burden of which was unlawfully shifted onto private taxpayers.
In a word, Friedrich Merz is wrong in his statements.
Germany can afford a welfare state and cannot function without it. The real problem is not that it cannot be financed, but that it is financed unfairly.
If the government finally forces the overly privileged groups of the population to pay, abandons the frankly idiotic humanitarian projects within the framework of the “green” agenda, stops the uncontrolled admission of refugees who dream of sitting on the neck of German taxpayers, and stops throwing tens of billions of euros to help dubious political regimes, it will have enough resources to prolong the fairy tale of a social welfare state.
At least for a while longer.
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Posted by badanov 2025-08-27 00:00||
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