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| A Fiscal Scold, Merkel Softens Tone at Home | |
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| BERLIN — A German government that has for years preached austerity as the sole path to prosperity, both at home and abroad, is poised to break open its pocketbook. | BERLIN — A German government that has for years preached austerity as the sole path to prosperity, both at home and abroad, is poised to break open its pocketbook. |
| As Chancellor Angela Merkel, known for her insistence on fiscal rectitude, negotiates for her third term with her only viable coalition partner, the Social Democrats, she is being pushed to accept a range of leftist policies that would sharply increase government spending. | As Chancellor Angela Merkel, known for her insistence on fiscal rectitude, negotiates for her third term with her only viable coalition partner, the Social Democrats, she is being pushed to accept a range of leftist policies that would sharply increase government spending. |
| Among the measures being demanded are a minimum wage — the country’s first — of $11.50 an hour, equal pensions in the east and the west, equal pay for men and women, higher child care payments, a tax increase for the wealthy, and sharply increased funding for infrastructure, education and energy. | Among the measures being demanded are a minimum wage — the country’s first — of $11.50 an hour, equal pensions in the east and the west, equal pay for men and women, higher child care payments, a tax increase for the wealthy, and sharply increased funding for infrastructure, education and energy. |
| There is little change for the moment in Germany’s attitude toward its neighbors. While Greece, Italy, Spain and even France are hacking away at long-cherished parts of their social safety net to meet the demands of Berlin and their international creditors, Ms. Merkel, a conservative, and her unyielding finance minister, Wolfgang Schäuble, are resisting any sort of redistribution of funds within the euro zone. | There is little change for the moment in Germany’s attitude toward its neighbors. While Greece, Italy, Spain and even France are hacking away at long-cherished parts of their social safety net to meet the demands of Berlin and their international creditors, Ms. Merkel, a conservative, and her unyielding finance minister, Wolfgang Schäuble, are resisting any sort of redistribution of funds within the euro zone. |
| Berlin’s attention to its own domestic priorities seems likely to stir resentment that the medicine of austerity prescribed by Berlin abroad is administered with less zeal at home. Analysts say the contrast is angering voters throughout Europe, where populist and anti-European Union parties are steadily gaining strength outside Germany. | Berlin’s attention to its own domestic priorities seems likely to stir resentment that the medicine of austerity prescribed by Berlin abroad is administered with less zeal at home. Analysts say the contrast is angering voters throughout Europe, where populist and anti-European Union parties are steadily gaining strength outside Germany. |
| From the German perspective, years of frugality and sacrifice have led to a strong economy, a full treasury and predicted budget surpluses to the end of Ms. Merkel’s next four-year term in 2017. What Berlin is demanding of its European partners, German officials are quick to say, is that they do much the same for themselves. | From the German perspective, years of frugality and sacrifice have led to a strong economy, a full treasury and predicted budget surpluses to the end of Ms. Merkel’s next four-year term in 2017. What Berlin is demanding of its European partners, German officials are quick to say, is that they do much the same for themselves. |
| “The Germans say to themselves, ‘We are a family, and the other Europeans are distant relatives,’ ” said Jürgen W. Falter, a professor of political science at Johannes Gutenberg University Mainz. “In a family, you stand together; distant relatives, you help when you can.” | “The Germans say to themselves, ‘We are a family, and the other Europeans are distant relatives,’ ” said Jürgen W. Falter, a professor of political science at Johannes Gutenberg University Mainz. “In a family, you stand together; distant relatives, you help when you can.” |
| It is a sentiment widely shared across the German political spectrum. Since Ms. Merkel rose in the ranks of the conservative Christian Democrats in the 1990s, she has already moved her party well to the left. That shift helped cement her election victory in September, when the results showed that Germans voters wanted center-left policies, but run by the nominally conservative chancellor. | It is a sentiment widely shared across the German political spectrum. Since Ms. Merkel rose in the ranks of the conservative Christian Democrats in the 1990s, she has already moved her party well to the left. That shift helped cement her election victory in September, when the results showed that Germans voters wanted center-left policies, but run by the nominally conservative chancellor. |
| Reviving her partnership with the Social Democrats, with whom Ms. Merkel governed in her first term, from 2005 to 2009, implies a further shift to the left in a country where most people expect the state to assist in times of need, and the gap between rich and poor — while widening — is narrower than in the United States or even Britain. | Reviving her partnership with the Social Democrats, with whom Ms. Merkel governed in her first term, from 2005 to 2009, implies a further shift to the left in a country where most people expect the state to assist in times of need, and the gap between rich and poor — while widening — is narrower than in the United States or even Britain. |
| In this move, Ms. Merkel is being pushed by domestic pressures to adopt policies that would actually be welcomed by most economists, the United States Treasury and many leading European officials. They have long argued that Germany needs to balance growth in the euro zone by stimulating domestic demand and reducing its dependence on exports. | In this move, Ms. Merkel is being pushed by domestic pressures to adopt policies that would actually be welcomed by most economists, the United States Treasury and many leading European officials. They have long argued that Germany needs to balance growth in the euro zone by stimulating domestic demand and reducing its dependence on exports. |
| For years, Ms. Merkel has rebutted that reasoning, saying each country has to keep its own fiscal house in order. But under pressure from domestic politics, she appears to be easing up. | For years, Ms. Merkel has rebutted that reasoning, saying each country has to keep its own fiscal house in order. But under pressure from domestic politics, she appears to be easing up. |
| Ms. Merkel has also pledged to help others in Europe, especially in alleviating youth unemployment and building a European future by investing in research and training. But the Social Democrats want her to go even further, arguing for more aid to the poorer European countries as well as more spending at home. | Ms. Merkel has also pledged to help others in Europe, especially in alleviating youth unemployment and building a European future by investing in research and training. But the Social Democrats want her to go even further, arguing for more aid to the poorer European countries as well as more spending at home. |
| Much speculation in the current coalition talks, then, has revolved around whether Ms. Merkel’s partners will demand to take over the Finance Ministry, now run by Mr. Schäuble, a passionate European who has come to personify Germany’s austerity policies on the Continent. | Much speculation in the current coalition talks, then, has revolved around whether Ms. Merkel’s partners will demand to take over the Finance Ministry, now run by Mr. Schäuble, a passionate European who has come to personify Germany’s austerity policies on the Continent. |
| It is one place where Ms. Merkel could draw a line, as she and her inner circle seem to feel vindicated by glimmers of growth in weaker European countries, crediting the austerity policies they have advocated. Even if the Social Democrats gained control of the Finance Ministry, it would not necessarily signal a major change in Berlin’s policies toward the rest of Europe, given the broad support in Germany for Ms. Merkel’s handling of the euro crisis, analysts have said. | It is one place where Ms. Merkel could draw a line, as she and her inner circle seem to feel vindicated by glimmers of growth in weaker European countries, crediting the austerity policies they have advocated. Even if the Social Democrats gained control of the Finance Ministry, it would not necessarily signal a major change in Berlin’s policies toward the rest of Europe, given the broad support in Germany for Ms. Merkel’s handling of the euro crisis, analysts have said. |
| Whether the Social Democrats can persuade Ms. Merkel in particular and Germans more broadly to free up funds for the rest of Europe — or at least lighten Berlin’s demands for greater budget rigor among its European Union partners — is hardly clear, even as the widening gap between Germany’s strength and that of its partners becomes an increasingly pressing issue for the union’s long-term health. | Whether the Social Democrats can persuade Ms. Merkel in particular and Germans more broadly to free up funds for the rest of Europe — or at least lighten Berlin’s demands for greater budget rigor among its European Union partners — is hardly clear, even as the widening gap between Germany’s strength and that of its partners becomes an increasingly pressing issue for the union’s long-term health. |
| If there is no attempt to redistribute income at the European level, then “the imbalance in Europe will only increase,” said Nils Diederich, a politics and social sciences professor at the Free University in Berlin. | If there is no attempt to redistribute income at the European level, then “the imbalance in Europe will only increase,” said Nils Diederich, a politics and social sciences professor at the Free University in Berlin. |
| And that could work against Germany’s interests in the long term, analysts say. Germany has prospered in recent years, as Ms. Merkel and many analysts acknowledge, in part because the euro is undervalued relative to the German economy and its export success, and overvalued relative to the economies of nations to the south, such as Greece, Italy, Spain and Portugal. | And that could work against Germany’s interests in the long term, analysts say. Germany has prospered in recent years, as Ms. Merkel and many analysts acknowledge, in part because the euro is undervalued relative to the German economy and its export success, and overvalued relative to the economies of nations to the south, such as Greece, Italy, Spain and Portugal. |
| Germany, in contrast to its partners in the bloc, boasts that it has never had so many people working and contributing to tax and welfare systems — just over 42 million. In September alone, the government said, it collected 55 billion euros in taxes, about $75 billion. While sovereign debt has soared since the early 2000s, it is, at around 80 percent of gross domestic product, less of a share of national wealth than in the United States, France or Britain. | Germany, in contrast to its partners in the bloc, boasts that it has never had so many people working and contributing to tax and welfare systems — just over 42 million. In September alone, the government said, it collected 55 billion euros in taxes, about $75 billion. While sovereign debt has soared since the early 2000s, it is, at around 80 percent of gross domestic product, less of a share of national wealth than in the United States, France or Britain. |
| Yet politicians of all stripes and, not least, voters have come around to the notion that Germany has put off too many of its own needs for too long while the euro crisis has absorbed the chancellor’s attention. To judge by the political theater since the Sept. 22 elections, domestic spending will take precedence, and many economists say that after years of austerity, a loosening of the purse strings here is long overdue. | Yet politicians of all stripes and, not least, voters have come around to the notion that Germany has put off too many of its own needs for too long while the euro crisis has absorbed the chancellor’s attention. To judge by the political theater since the Sept. 22 elections, domestic spending will take precedence, and many economists say that after years of austerity, a loosening of the purse strings here is long overdue. |
| A recent study said that Germany would have to spend more than €100 billion, or about $135 billion, over the next 15 years just to repair its existing stock of roads, bridges and railways, which in populous areas of western Germany have been neglected for years. With an average of 1.4 children per woman — 2.1 is the replacement rate — Germany needs to find ways to make life easier for working women. | A recent study said that Germany would have to spend more than €100 billion, or about $135 billion, over the next 15 years just to repair its existing stock of roads, bridges and railways, which in populous areas of western Germany have been neglected for years. With an average of 1.4 children per woman — 2.1 is the replacement rate — Germany needs to find ways to make life easier for working women. |
| Ms. Merkel, listing her priorities for a third term — when she is expected to be increasingly conscious of her legacy — included a strong and durable European Union. But her other priorities underscored her desire to leave behind a stronger Germany, too. That richer, stronger Germany may act as a locomotive for the rest of Europe, increasing imports and perhaps even migrant flows from France, Italy, Spain or elsewhere. But demands on Germany for greater sharing, despite Berlin’s attachment to austerity policies for the union broadly, are only likely to increase. | Ms. Merkel, listing her priorities for a third term — when she is expected to be increasingly conscious of her legacy — included a strong and durable European Union. But her other priorities underscored her desire to leave behind a stronger Germany, too. That richer, stronger Germany may act as a locomotive for the rest of Europe, increasing imports and perhaps even migrant flows from France, Italy, Spain or elsewhere. But demands on Germany for greater sharing, despite Berlin’s attachment to austerity policies for the union broadly, are only likely to increase. |
| From Rome, Roberto d’Alimonte, a political science professor at Luiss Guido Carli University, expressed little doubt that Germany would eventually have to redistribute wealth in Europe, not just at home, if for no other reason than to secure its own standing. | From Rome, Roberto d’Alimonte, a political science professor at Luiss Guido Carli University, expressed little doubt that Germany would eventually have to redistribute wealth in Europe, not just at home, if for no other reason than to secure its own standing. |
| “What place in history can Germany have without Europe?” he asked in a telephone interview. “A community of values has to include also some kind of solidarity. Because without that, it will not survive.” | “What place in history can Germany have without Europe?” he asked in a telephone interview. “A community of values has to include also some kind of solidarity. Because without that, it will not survive.” |