Merkel launches campaign with populist but costly promises

Mon Jun 24, 2013 10:47am EDT

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By Erik Kirschbaum

BERLIN, June 24 (Reuters) - German Chancellor Angela Merkel launched her re-election campaign on Monday with promises her coalition partners dismissed as unaffordable and even one party ally said would never see the light of day.

Merkel told leaders of her Christian Democrats (CDU) and their Christian Social Union (CSU) sister party that if she is re-elected she wants to raise child benefits, pensions for women with children and pensions for low-income workers.

At the same time as preaching austerity to other euro zone nations struggling under high debt, Merkel said she wanted to see Germany invest billions more in infrastructure projects on top of the other multi-billion euro promises.

The pledges were criticised by the opposition and German media as expensive voter giveaways. One newspaper, Bild, estimated the increase in child benefits and pensions would total 15 billion euros per year. Most proposals have little chance, Bild said.

Merkel and CSU chairman Horst Seehofer, the Bavarian state premier who is also up for re-election in September, said there would be no tax increases to pay for the promises. The German economy is in solid shape with low unemployment.

Party leaders believe tax revenues will rise to 700 billion euros in 2017 from 600 billion in 2012 so no tax increases are needed. The government expects to have a balanced budget in 2014 and could even post a surplus soon.

"That would be the wrong way to go," said Merkel, referring to tax increases. She learned her lesson after nearly squandering a sure win in 2005 by pledging to raise value added tax (VAT) to 18 percent from 16 percent before the vote.

The conservatives were at 42 percent in polls just before the 2005 election but fell to 35.2 percent, in part due to Merkel's tax increase pledge, and were forced into an unwanted grand coalition with the centre-left Social Democrats (SPD).

Merkel, who is well ahead of the SPD in opinion polls but may not have enough support to renew her centre-right coalition with the FDP after the Sept. 22 election, has been pushing hard to appeal to voters on the conservative and liberal wings of her party.

On Friday, in a gesture bound to appeal to voters on the conservative side, she told Russian President Vladimir Putin on a trip to St Petersburg that Germany wanted art looted by Soviet armies after World War Two repatriated.

Merkel's pledge to raise pensions has a historic precedent. Another CDU leader, Konrad Adenauer, won West Germany's only absolute majority (50.2 percent) in the 1957 election after promising to link pension increases to wage increases.

But those promises carry no appeal for her coalition partners, the Free Democrats (FDP). FDP chairman Philipp Roesler warned the conservatives against being led astray by the "sweet poison of spending money" before the election.

Also opposed to the spending spree, which the CDU calls a "government programme" rather than an election programme, is Kurt Lauk, head of the CDU economic council. He said these were only campaign promises and should not be taken seriously.

"Campaign promises are the things that parties promise to get elected," he said. "It's never happened before that election promises were turned directly into government programmes. And all the voters know that from past experience."

Merkel's challenger, Peer Steinbrueck of the SPD, called the CDU/CSU campaign programme "pre-meditated fraud". (Editing by Alison Williams)

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