From the outbox of Meyer’s inbox:
First it was Greece. Then Great Britain. Now it’s Germany’s turn to slash their way through social programs to get their budgets under control. Like other Europeans nations, Germany isn’t deciding what to cut (everything is on the table) but how much. Plus they’re still paying for reunification. That’s a big bill to pay off on lay-away.
GERMAN CONTEMPLATE CUTS TO SOCIAL WELFARE SYSTEM by Borzou Daragahi, Los Angeles Times
Unemployed mom Fee Linker lives on welfare benefits in a centrally located five-room flat that costs about $1,500 a month. The garden terrace looks out onto a lush wooded area where birds chirp in the trees.
“I wouldn’t get along without this government money, not with this apartment,” says Linker, who sends her 6-year-old daughter and two sons, 7 and 10, to a private school. “It’s my opinion that as a mother of three, I deserve a comfortable life.”
These days, fewer politicians and economist agree, and if proposed laws are enacted, Linker’s benefits could be gone with the stroke of a bureaucrat’s pen.
The German government is contemplating spending cuts and tax increases totaling $100 billion by 2014. The Cabinet approved the measures July 7, though many details have not been disclosed. But proposals so far include slashing $40 billion in welfare benefits, in part by allowing caseworkers to decide how much, if anything, people like Linker get instead of doling out automatic payments.
“Germany has never [before] agreed to an austerity package to this extent, but these cuts have to be made in order for the country to establish a stable economic future,” a grim-faced Chancellor Angela Merkel told the nation in early June. “We cannot afford everything we wish for if we want to create a future.”
After providing poor citizens with generous stipends for decades, Germany’s welfare system is coming under scrutiny like never before. Europe’s economic powerhouse says that it’s no longer able to foot the bill. Economists worry that maintaining current benefit levels for Germany’s increasingly elderly population is placing an unfair burden on the young, who must eventually shoulder the cost.
There are also great regional variations that critics say unfairly result in some areas subsidizing others. In Berlin, up to 15% of families and 30% of children receive some form of public assistance, whereas only one of 20 people are on social welfare in richer states such as Bavaria.
Among the proposed measures are cutting up to 15,000 workers from the public payroll, tightening rules for benefits to the able-bodied or the long-term unemployed and privatizing some pension plans. They also include plans to cut assistance to single parents, subsidies for heating bills and maternity leave benefits. There’s also a plan to make employers pick up a larger share of healthcare costs.
Under the austerity measures, between 2012 and 2035, the initial retirement age will rise a month every year. Another proposal calls for cutting 40,000 troops from the 250,000-strong German armed forces, the Bundeswehr.
Read the rest of what’s happening in Germany here.
