Merz in the Bundesrat: Investment program approved

A hint of resignation resonates when Manuela Schwesig expresses a wish at the end of her speech in the Bundesrat. "I would be very pleased," says the Minister-President of Mecklenburg-Western Pomerania, referring to the immediate investment program passed shortly afterwards, "if this important news is not overshadowed by other eruptions in the Bundestag."

Schwesig has been in politics long enough to know that this is a pious wish. The massive coalition crisis over the non-election of lawyer Frauke Brosius-Gersdorf to the Constitutional Court is also the dominant topic at the meeting of the state representation – even if it is not on the agenda. The state premiers talk about it in television statements, during small talk in the lobby of the former Prussian state parliament, and even during the plenary session, cell phones with the latest headlines are shown around. Anger and horror reign in the state governments led by the SPD, while bewilderment prevails in those led by the CDU. How can the problem be solved? A shrug. "No idea," says one state premier.

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On this day, the Bundesrat should actually be concerned with more important and, above all, more gratifying matters: The government's response to the question of how the German economy can escape the more than two-year recession is pending. And the Chancellor himself is making his inaugural visit to the parliament of the state governments on this occasion.

Friedrich Merz begins his speech with a gesture of humility. "The states form the federal government – ​​not the federal government the states," the Chancellor acknowledges, thus adopting a phrase often quoted by state premiers – especially when the federal and state governments are once again at odds over money. The last major conflict of this kind was not long ago: It was the dispute over who would bear the costs of the investment program. It was settled just two weeks ago with the federal government's promise to reimburse the states half of the tax shortfalls and the municipalities all of them.

Merz could demand a thank you for this, but he does it the other way around and expresses his "explicit" gratitude for the cooperation over the past few weeks. Merz emphasizes that he will continue this way. "This federal government wants to work closely with the states, the Bundesrat, and also the municipalities."

But the Chancellor also offers a bit of self-compliment. "The immediate investment program is a signal that is urgently needed after more than two years without economic growth in our country," he says. His government is implementing the first corporate tax reform in Germany in 15 years: super depreciation for companies this year and the next two years, and a gradual reduction in corporate tax starting in 2028. "With this, we are making Germany an attractive and competitive location again," Merz says.

However, the Chancellor warns that the investments can only have an impact if the "overdue structural reforms" are implemented quickly and successfully. The modernization and digitalization of the country is a "cross-cutting federal task," especially since the state must cut costs elsewhere in light of the massive investments in infrastructure and defense. "We also need an honest critique of tasks and spending at the state and local levels," Merz says, appealing: "Please let us tackle this major task together."

North Rhine-Westphalia's Minister-President Hendrik Wüst (CDU) takes up this issue and, in his speech, advocates thinking big about modernization. "All levels of government must be prepared to delegate authority to where tasks can be best performed," demands the man from Münsterland. Responsibilities and even power must be relinquished if doing so promises a better outcome. "A single state must not block everything when it comes to setting common standards – even if it is as large as North Rhine-Westphalia," says Wüst. He is prepared to accept majority decisions among the states.

Expectations regarding the “Modernization Agenda for State and Administration,” which the federal and state governments intend to present by the end of the year, are not exactly diminishing on this day.

At 10:46 a.m., the moment finally arrives: As expected, the Bundesrat approves the immediate investment program – unanimously. A good kilometer further north, in the Bundestag, they couldn't even dream of such a majority. And because of this, several state premiers leave the plenary immediately after the vote to make phone calls. The need for discussion is great.

Bavaria's Prime Minister Markus Söder (CSU) puts it this way: "I have little hope that other things will not dominate the media today."