Schroeder Shares Murky Economic Plans

Chancellor Gerhard Schroeder laid out a foggy vision of Germany’s future in his first address to Parliament on Tuesday, challenging the private sector to create the jobs he promised on the campaign trail while offering little hope of tax relief to stimulate such investments.

The 54-year-old Social Democratic chancellor, who has been in office only two weeks, vowed to “mobilize the creative forces of our country” and get the nation “on the move again.” He acknowledged that he was elected with a mandate to rid Germany of the plague of unemployment, and he promised a sizable expansion of the ranks of young Germans secure in the self-sufficiency that only a job can bring.

But details were lacking on his plans for reducing unemployment that holds stubbornly at more than 10% and slimming down a social welfare system that costs most working Germans more than half of their gross income in taxes.

With much thumping of the lectern and rousing of partisan applause, Schroeder spoke for more than two hours but seldom strayed beyond the campaign rhetoric that proved enough to unseat Europe’s longest-serving leader, Helmut Kohl.

Schroeder blamed Kohl for the dreary state of Germany’s finances and suggested that it will be an uphill battle to restore prosperity in a country where every fourth mark of tax money goes to service public debt.

“The old government by no means left us a house set in order,” Schroeder told the Bundestag, the lower house of Parliament. “This inherited financial burden is forcing us onto a course of resolute consolidation.”

The allusion to spending reductions was one of the few references in his speech to encourage business and industry to believe that the new government recognizes the need to stop raising taxes to meet mounting expenses.

The German Industry and Trade Council issued a statement after Schroeder’s speech complaining that his objectives were clearly “more state instead of more market” and criticizing a proposed tax reform as little more than a redistribution of investment-stifling burdens.

Schroeder’s government has submitted a proposal for $8.9 billion in tax cuts that will be taken up by the Bundestag on Friday, but most of the relief is aimed at low- and medium-income taxpayers rather than employers.

“There is precious little to detect in the way of a new beginning” in tax policy, said Michael Fuchs, president of the Federation of German Wholesale and Foreign Trade.

While economic policy claimed most of Schroeder’s attention, he also sought to ease concerns that the move of Germany’s capital from Bonn, where he was speaking, to Berlin next year represents any threat to the country’s postwar commitment to democracy and peaceful relations with neighbors.

Berlin still conjures up images for some people of a city that is “too Prussian, too authoritarian, too centralized,” Schroeder conceded. But he insisted that his government is drafting “a totally nonaggressive vision of a republic of the ‘New Center.’ ”

The city that has emerged from the rubble of Adolf Hitler’s Third Reich is marked by “an atmosphere of openness, which has made the city attractive to youth and the cultural avant-garde from all of Europe,” Schroeder said.