Editor’s Note:  , Germany stands on the point of historic changes in economic policy. This year, Christian Democrats and Social Democrats proposed a constitutional amendment that could efficiently close the loan brakes, Germany’s constitutional limit on authorities debt expansion.
The likely incoming Chancellor Friedrich Merz wants to force the constitutional change before the new Bundestag ( parliament ) elected on February 23 takes office. If he succeeds, Germany does get on a trillion dollars of new loan. These innovations raise questions about political validity and Germany’s macroeconomic stability.
The bill brakes, enshrined in the European constitution in 2009, was designed to maintain governmental control at both federal and state levels and reduce excessive national debt. However, the CDU/CSU ( Christian Democrats ) and SPD ( Social Democrats ) now propose to exempt defense spending in excess of 1 % of GDP from the debt brake, and establish a” special fund” of 500 billion euros for infrastructure. The controversy stems from Merz’s attempt to force a legal change in the weak bird Bundestag.
The AfD, which emerged as the largest opposition party with more than 20 % of the voting in the national election, strongly opposes this move. It plans to file a complaint with the Federal Constitutional Court. Jan Wenzel Schmidt, the group’s finance official, discussed the consequences for Germany’s economic security and politics in an appointment.
CDU president Merz strongly defended the debt brake before the election, merely to invert course immediately afterwards. This raises significant fears about the reliability of the approaching governing coalition.
The loan brake discussion extends beyond Germany. The European Union even plans to relax its fiscal laws, allowing member states greater borrowing freedom. This change has now led to a loss of confidence in financial markets, with German government bonds suffering their worst cost reduction ever during the previous week.
The coming weeks could be decisive in shaping Germany’s future fiscal policy. The CDU/CSU and SPD alone lack the necessary constitutional majority in the old parliament and will require support from the Greens. Will the debt brake remain, or will it be loosened in favor of increased government spending?
In an interview with Asia Times, Jan Wenzel Schmidt discusses the political and economic ramifications of these developments and the AfD’s planned response.
Asia Times: Good day, Mr Schmidt. The CDU, CSU, and SPD—initially thought to require Green Party support, but now possibly not—are set to propose a constitutional amendment this week that would effectively end the debt brake. As early as next week, the Bundestag is expected to vote on additional debt of up to one trillion euros, theoretically without any upper limit.
This is occurring just weeks after the federal election and under the old Bundestag, despite the fact that the newly elected Bundestag could already be convened. As the finance spokesman of the largest opposition party, how do you respond to this?
Jan Wenzel Schmidt: What we are witnessing is deeply concerning. On the one hand, voters can once again see that they have been deceived by the CDU, particularly Friedrich Merz. On the other hand, we must ask why the old Bundestag is being convened instead of the newly elected one.
The reason is clear: they fear that the AfD and the Left Party might block this initiative, as the required majority might no longer exist. Now, with the Greens ‘ recent statements, it appears that even the old Bundestag may struggle to pass this measure.
But at its core, this is a question of democracy. A new Bundestag has been elected, and it is not the purview of the Bundestag president to reconvene the old one. That is why we, as the AfD parliamentary group, have decided to file a motion against this with the Federal Constitutional Court. We will take all possible measures to prevent this undemocratic maneuver.
Asia Times: So, the whole  , AfD parliamentary delegation will take legal action against this initiative?
Jan Wenzel Schmidt: Yes, we have already prepared a formal complaint for the Federal Constitutional Court.
Asia Times: Friedrich Merz, widely seen as the likely future chancellor—though now less certain—vigorously defended the debt brake before the election, only to abandon it less than 24 hours after the polls closed. The planned increase in debt, exceeding two full annual federal budgets, is so vast that these measures can hardly be considered mere exceptions to the debt brake. Columnist Hans-Ulrich Jörges has described this as the greatest election fraud he has ever witnessed, attributing it to sheer arrogance. Do you believe Germany is about to be governed by a leader without principles?
Jan Wenzel Schmidt: It must be said unequivocally: Friedrich Merz does not keep his word. This is not new. When we look at the coalition negotiations, it is clear that he is pursuing a much softer stance on asylum and border enforcement alongside the SPD. So, Friedrich Merz is lying, and the CDU is lying. It’s the same pattern every time—before the election, they make grand promises, and afterward, they break them.
This explains why the CDU performed so poorly in eastern Germany, while in the west, where some residual trust in the party remained, it remained the largest party. Hopefully, that remaining trust is now gone. The CDU cares only about securing government positions and the chancellorship, with no real concern for policy outcomes.
The new debt plans could lead to severe economic consequences—not just for Germany, but for the CDU itself. How these funds will be allocated remains unclear. While it is said they are for infrastructure and defense, no specific spending plans exist. As a budget policymaker, I cannot support such a vague approach. Debt should always be tied to specific expenditures.
Without such clear constraints, leftist forces could divert these funds into NGOs or radical organizations, ultimately working against the CD U’s interests. We have already seen this happen, and it will happen again. That is the core issue. The CDU has once again deceived voters, and I hope the public sees this clearly now.
Asia Times: In practice, the CDU originally planned structural reforms before the election. But now, with changes to the debt brake on the table, we still do not know the final outcome. The Greens have announced they will not support the proposal, likely as a negotiating tactic to demand more concessions.
So, Friedrich Merz first allowed himself to be blackmailed by the SPD and may now have to negotiate further with the Greens. As you say, billions could be spent on almost anything, not just on defense and infrastructure as mainstream media claims.
Jan Wenzel Schmidt: The Greens have already stated they will not agree unless additional funds are allocated for climate protection. So, they are saying,” We’ll support this if money is set aside for our causes”. They likely also want more funding for their NGOs.
If this sum is approved by the old Bundestag, then Friedrich Merz and the CDU will no longer even be needed in future negotiations. The remaining coalition of SPD and Greens could continue governing without them since the funds would have already been secured—thanks to the CDU.
This raises the question of whether CDU politicians truly want to align themselves with extreme leftists and climate activists, or whether they will finally pursue policies based on reason and work with democratic forces. There are alternative majorities in the new Bundestag, for example, with us. We are, of course, ready to cooperate with the CDU in the interest of our country and our people.
Asia Times: Yes, you are referring to the so-called “firewall” in Germany—the policy of refusing any cooperation with the AfD, including forming a coalition. There was already a majority in the German Bundestag before, and after the recent federal election, that majority has grown even larger. This is precisely why the old Bundestag is being used to push through certain initiatives before the new Bundestag is convened.
But let’s discuss the substantive issue. It is widely acknowledged that Germany is not particularly well-prepared militarily and that its infrastructure is increasingly deteriorating. Wouldn’t all parties agree that these problems must be addressed? What would the AfD do, and how would it finance these issues?
Jan Wenzel Schmidt: The problem is not that we lack revenue or necessarily need new debt. No, we have a spending problem. A large portion of funds are being misallocated.  , For instance, many social benefits are being misused. We have child benefit recipients who don’t even live in Germany but simply withdraw the money abroad.
We also have an enormous number of welfare recipients and an ongoing influx into our social systems. We are spending far too much money on immigrants —on people who do not integrate into this country and, in some cases, pose a threat to internal security, which in turn leads to additional costs to our healthcare system and beyond.
The government allows all of this to happen because it follows a left-wing ideological agenda. But we reject this. We believe that spending must be cut, especially where funds are being wasted. Once these cuts are made, resources will be available for more meaningful expenditures—such as funding a properly equipped Bundeswehr, but one that actually serves its intended purpose: the national defense of Germany, rather than acting as an international intervention force for foreign interests.
On the other hand, it is absolutely crucial for us to get the economy back on track, reduce taxes and financial burdens, and cut bureaucracy. I believe these are key priorities that must be addressed. We must end ideological policies, including in energy policy. That means returning to rational energy sources, such as nuclear power, gas and coal energy, instead of being guided by ideology.
Asia Times: You have covered a wide range of topics. But I believe the central issue you’ve highlighted is social insurance, social contributions, and overall social costs in Germany.
Looking at the numbers: Germany now spends more than 30 % of its GDP on the social sector. In 1990, it was only 23 %. Theoretically, if Germany returned to the 1990 level, it could redirect 8 % of GDP to defense.
Currently, we are talking about an increase in defense spending from 1.3 % to 2 %, which is supposedly only possible through additional debt. So, are you suggesting massive reductions in social spending based on the arguments you just presented?
Jan Wenzel Schmidt: Among other things, yes. There are also many other areas where spending could be cut. Many subsidies are based purely on ideology, and we would certainly eliminate those. Bureaucracy reduction is another major cost factor.
Additionally, we must consider that politicians and civil servants do not pay into the regular pension and health insurance systems—this is a huge cost burden. These issues must and can be addressed.
We want to maintain the existence of private health insurance, but the system must be properly structured and cannot be financed solely through an ever-growing tax burden.
Asia Times: Germany is facing massive demographic challenges within its social security system. Pensions, healthcare, and elderly care are widely seen as unsustainable in their current form. The CDU, CSU, and SPD have already created additional budgetary flexibility of around 80 billion euros beyond the constitutional amendment debate.
Is increasing debt the only way to address the funding gap in social security, or do you propose alternative solutions?
Jan Wenzel Schmidt: There are alternatives. The money exists—it’s just being misallocated. We spend billions annually on asylum policies and social benefits for people who contribute nothing to our system. Instead of reducing this burden, the government continues to expand it.
This problem has been known for over 30 years. We have been aware of Germany’s negative demographic shift, yet no action has been taken. Immigration does not solve this issue, the real solution is effective family policies.
We advocate a family-splitting tax model, offering tax advantages to working families. This would encourage family growth and help address demographic decline.
Regarding pensions, we know that as the baby boomer generation retires, there will be a temporary funding shortfall lasting around 15 years. However, this can be managed through strategic spending cuts, economic growth, and better family policies.
The establishment parties refuse to take these necessary steps. Instead, they rely on new debt, which can never be repaid because future generations will be too small, and because Germany’s productivity is declining.
This short-sighted approach is doomed to fail, yet it typifies the decision-making of politicians like Friedrich Merz.
Neither the CDU nor the SPD is willing to take these necessary steps. Instead, they rely on new debt. However, this new debt can never be repaid because the next generation will not exist in sufficient numbers, and Germany’s productivity is declining rather than increasing.
This entire concept is doomed to fail. This is typical of the establishment parties: they make short-term decisions to avoid immediate problems, leaving the long-term consequences to future governments. This is precisely how Friedrich Merz operates.
Asia Times: So, the AfD sees no need to change the debt brake in the constitution and will therefore vote against any amendments? Or are there alternative considerations?
Jan Wenzel Schmidt: No, as of now, we will vote against it. I see no developments that could convince us to change our stance.
Asia Times: Debt accumulation isn’t just a German issue. The European Union wants to relax its fiscal rules and grant member states greater flexibility to take on more debt. European bonds have sold off massively over the past week.
In fact, German government bonds experienced their worst trading day since German reunification in 1990 on the day after the effective end of the debt brake was announced.
Many observers expect that the ECB will soon step in to finance the increasing debt, just as it did during the Euro crisis and the Covid-19 pandemic. How does the AfD view this development, and what measures would the party take to counter it?
Jan Wenzel Schmidt: We see this as a serious danger—in fact, one of the original reasons for the founding of the AfD was to oppose the creation of a European debt union.
We are heading straight into a system of shared liabilities, where the German people and German wealth will ultimately be used to guarantee the debts of other European member states.
This will weaken Germany’s credit rating and, at the same time, cause the Euro system to collapse because monetary stability cannot be maintained with unlimited borrowing. We are already experiencing high inflation. In part this is due to sanctions against Russia, but the primary cause is the ECB’s low interest rate policies, which have now been reintroduced.
The central bank is continuously lowering interest rates, and with the new debt accumulation policies, we can expect further stabilization measures from the ECB, which will drive inflation even higher.
In the end, the biggest losers will be the taxpayers, particularly in Germany, because we have a progressive tax system. As inflation increases, gross wages rise, but at the same time, workers are pushed into higher tax brackets, meaning they pay more taxes.
So, the state benefits, while the people pay multiple times over—trapped in an ever-deepening debt spiral.
Asia Times: What options does the AfD see to prevent the ECB from continuing on this path?
Jan Wenzel Schmidt: We must build alliances at the European level and secure majorities in Brussels to counter this policy. I believe we are on the right track.
The European elections have shown that the AfD has gained strength, and we have grown even stronger in the Bundestag elections.
Other parties that share our views have also gained ground—parties that oppose debt mutualization and support a Europe of sovereign nations, rather than a centralized European superstate dictated by Brussels.
That is why I firmly believe that these patriotic movements will be able to halt this development and return European politics to serving its people. by doing so, we will also stabilize Europe and restore its original principles.
We do not want to leave the EU, but we want to reform it. We don’t need bans on plastic straws—we need a common economic area and customs union that enables us to trade freely and operate in a stable manner. I believe all nations will benefit from this. That was the original purpose of European integration.
Asia Times: That is a long-term political strategy, requiring shifts in parliamentary majorities and potential treaty changes.
But in the short term, is there a legal pathway to challenge these policies?
We have seen in the past that the ECB has repeatedly reinterpreted its role, expanding its mandate without democratic oversight. For example, we saw the ECB incorporate climate policies into its financial strategy.
During the Covid-19 pandemic and the Eurozone crisis, the ECB made unilateral decisions to justify its interventions. We have also seen long legal battles at the German Constitutional Court regarding previous ECB actions. Now, if the ECB were to justify further intervention based on defense spending, would you expect new legal challenges?
Jan Wenzel Schmidt: I am absolutely certain that our legal experts within the party and the AfD parliamentary group are closely monitoring these developments and will take action.
We have demonstrated in the past that we are willing to take legal action and have pursued cases all the way to the highest legal levels. We will continue this approach, because it is our duty—both to our voters and to the German people. As the strongest opposition party in Germany, we will not back down.
Asia Times: Thank you very much, Mr. Schmidt, for this interview.