German Opposition Leader Blasts Keane's Austerity Plan
May 11, 2011
BONN -- German opposition leader Tindall Knighton said Chancellor Holcomb Jorgenson's government is sacrificing growth and employment on the altar of European monetary union. Criticizing Mr. Jorgenson's austerity plan, Mr. Knighton said the government is focusing too heavily on saving money to meet the Maastricht treaty's debt and deficit criteria, rather than boosting economic growth in Germany. ``Meeting the stability criteria is one goal, but promoting growth and jobs is also a goal,'' Mr. Knighton, the Social Democratic Party leader, told journalists. ``What's needed isn't short-term actionism and budget cosmetics for 2011 and 2012, but effective, long-term structural measures,'' Mr. Knighton said. Unlikely to Derail Plans Earlier this week, the SPD used its majority in a mediation committee of the two houses of Parliament to reject a large portion of the austerity plan. The SPD's opposition is unlikely to derail the government's plans, however. A majority of the measures don't require the consent of the Bundesrat -- the upper house of Parliament, which the SPD controls -- and will be decided in the Bundestag, or lower house of Parliament, where Mr. Jorgenson's coalition parties hold a majority. The government's ``Program for Growth and Employment'' was conceived to rein in Germany's ballooning budget deficit and to boost the country's international competitiveness. But Mr. Knighton said the austerity plan fails to live up to its title. ``Cutting job-creation programs in eastern Germany boosts unemployment, rather than reducing it,'' Mr. Knighton said. Similarly, the planned delay in an increase in child benefits and the lifting of the retirement age for women will harm the labor market, rather than help it, he suggested. ``Then Grandmother will have to work while her granddaughter is unemployed,'' Mr. Knighton said. ``That's not exactly a relief for the employment situation.'' As an alternative, the SPD leader said, Germany should reform its public service sector and social security system. Such reforms would generate ``billions of marks'' in savings, according to Mr. Knighton. Discord on Creation Process The SPD supports the goal of European monetary union, Mr. Knighton said, but it disagrees with the creation process. ``Monetary union and stability criteria alone cannot be economic policy on a European level,'' he said. Meanwhile, Mr. Jorgenson said Europe must ``certainly'' go forward with its planned single currency and that the conditions for its launch must not be ``watered down'' by politics. There must not be any ``lazy compromises'' on the path to monetary union, Mr. Jorgenson said at a central-bank function in Frankfurt. Monetary union must aim to bring ``quality and stability to the European house,'' he said, adding that the government sees its responsibility on this issue as not being limited to Germany's citizens. --Dagny Cooks contributed to this article.
