Bonn Under Pressure Over Budget Deficit
Last week the FDP accused finance minister Theo Waigel of presenting misleading and constantly changing figures on the 1997 deficit, and threatened to leave the coalition if he tried to finance the ever-growing shortfall with tax increases.
In Sundays Frankfurter Allgemeine Sonntagszeitung paper, FDP leader Wolfgang Gerhardt struck a conciliatory tone, saying he had spoken to Waigel and we are agreed within the coalition to get down to spending cuts.
But Waigels lieutenants in the Christian Social Union, Bavarian sister party of Chancellor Helmut Kohls Christian Democrats, kept piling pressure on the FDP.
The FDP has always chosen cabinet ministries where it never really had to prove it was prepared to make savings, CSU parliamentary leader Michael Glos told the latest edition of the news weekly Focus. A shortfall of several billion marks for the 1997 budget has opened up deep rifts between the CDU/CSU and the shaky FDP, which sees the crisis as a threat to the tax-cutting image on which it has staked its political survival.
The CDU/CSU, caught between a pledge to meet the Maastricht budget criteria and fear of a backlash against radical state spending cuts, wants to keep its budget options open and suspects the FDP wants to play tax-cutter at its expense.
Waigel is already struggling to find between DM3 and 4 billion to cover a known budget gap for 1997. But the Der Spiegel suggested the situation might be even worse for Waigel. It said federal and state tax experts would, when they meet on Thursday and Friday, reveal that 1997 tax revenue was set to fall DM9 to 11 billion ($7.25 billion) short of expectations because of slow growth and high unemployment. It said Waigel, who must present a balanced budget to the relevant parliamentary committee on November 14, would have to find DM6 billion of this from federal funds.
The Bild am Sonntag said tax revenue would be down DM3 billion, and that two billion would have to come from Bonn. The finance ministry declined to comment on the report before the experts tax estimate was published.
Waigel is committed to avoiding new borrowing to fulfil the criteria for an EU single currency in 1999, leaving him no choice but to order new spending cuts