Fiscal Effects of Federal Election Manifestos

Research

ZEW Analysis of the Party Programmes for the German Federal Election, Part 2

ZEW calculates the fiscal effects of the federal election programs on the national budget: Plans of the SPD, Left Party, Alliance 90/The Greens and BSW increase the overall budget and burden private households, while the Union, FDP and AfD shrink the overall budget and relieve private households.

ZEW Mannheim has calculated the fiscal effects of different federal election manifestos on the total federal budget. For purposes of the calculations, the budget is assumed to consist of the social security, federal and state budgets. On this basis, the overall budget would increase if the plans of the SPD, Left Party, Greens and BSW were to be realised. Inversely, this implies an additional financial burden for private households. With the CDU/CSU, FDP and AfD programmes the overall budget would shrink, while the disposable income of private households would rise.

This is the result of an analysis conducted by a team of researchers at ZEW, who evaluated the effects of key proposals for a reform of taxation, minimum wage and social benefits. The researchers also calculated the burden and relief for households under each election programme. The results for private households have already been published.

A larger budget with SPD, Left Party, Greens and BSW

According to the study, the budget increase would be strongest if the Left Party’s plans were implemented. The analysed proposals alone would account for an additional 46 billion euros. The programme of the Greens would increase the budget by more than four billion euros, the BSW programme would also result in additional spending of just under four billion euros, and the SPD’s proposals would mean an increase by more than one billion euros. In each case, private households would find themselves with an additional financial burden.

By contrast, the analysed programmes of CDU/CSU, FDP and AfD would lead to a decrease in government revenue: The strongest decrease (116 billion euros) would occur under the FDP programme, followed by the AfD (around 97 billion euros) and the CDU/CSU (around 47 billion euros) programmes. This would reduce the burden on private households.

All parties hope that their proposals would provide economic stimulus – through higher public investments in case of a larger total federal budget, or through financial relief for households in case of a reduced budget. However, it is not possible to analyse these economic consequences in the study.

“There is no right or wrong decision regarding the size of the budget. Voters have to consider whether they would rather see more money in private households or in the public purse. On the one hand, the money returned by the state to the citizens provides financial support to private households that are affected by inflation; on the other hand, this money would then not be available to the government for fulfilling its tasks,” explains Professor Holger Stichnoth, head of the ZEW Research Group “Inequality and Public Policy” and co-author of the study.

Which calculations were made?

The ZEW researchers analysed the financial impacts of the different parties’ reform proposals. The calculations are based on data from the Socio-Economic Panel (SOEP).

They take into account the election manifestos of the parties currently represented in the Bundestag and of the Sahra Wagenknecht Alliance. If a proposal in a manifesto was worded too vaguely for calculation purposes, the researchers made plausible assumptions based on political decisions and statements made by the respective party.

The calculations were made in cooperation with the daily newspaper “Süddeutsche Zeitung” (SZ), which provided support for the research on the election manifestos. The calculations were carried out by ZEW.