new coalition agreement

The Union and the SPD have finally nailed down the details of their policy arrangement and signed the contract which will put Merkel in as Chancellor when the Parliament votes on it. The document is titled "Mut und Menschlichkeit," or "Courage and Humanity." This outlines the basic tension in German policy. Essentially, the new government will need to have the courage to make some significant cuts in spending, but also will have to do so with a human touch.

Der Spiegel compares "Courage and Humanity" to "Pride and Prejudice," saying that this is the happy end compromise that everybody has known to be in the offing since the personell agreement for the cabinet was made a couple of weeks ago. Indeed, making the agreement was more or less a foregone conclusion. Of course, the title does demonstrate that some more tensions are inevitable. Mut or Menschlichkeit? Which will they choose? Well, Küchen Kabinett has a pretty good idea: look at the actual contents of the document.

The contract is titled "Together for Germany with Courage and Humanity." Courage is mentioned in the document 17 more times, while humanity is only mentioned in the title.

Quick! Who wants to claim to be a compassionate conservative? This is not some unfortunate freak occurance of wording, either. The policy agreement also appears to be "we'll cut your social benefits, but we'll give you a hug while doing it."

The first was the agreement to raise pension retirement age from 65 to 67, which makes a lot of sense since people are working longer, living longer and the pension system is going bankrupt. I would say this is a total no brainer.

The policy that really doesn't seem to make a whole lot of sense is raising the value-added tax (which basically amounts to raising a sales tax). There are a couple of problems with this. First, it's regressive (so much for "humanity"). Apparently the idea is that taxing rich people will drive down investment, so it's better to take it out on the poor people.

The other issue I see is that the biggest problem in the German economy is domestic consumption. People just don't have the confidence to buy things, because they are afraid of losing their jobs. How exactly you solve problems in consumer confidence by raising taxes is way beyond me. So basically the value added tax appears to be anti-poor and ineffective. But Franz and Angie didn't ask my opinion, and it's not even my country, so we'll just see how it plays out.