Germany-EU Revenue Chatter

It came out yesterday.....not by Chancellor Merkel or the political apparatus....but by journalists....that Germany intends to set up a 'cap' on the EU's next budget (2021 to 2027).

You have to remember....the EU tries to avoid yearly discussions on the budget, and just builds a single budget to last five years.

So what's the cap?  One percent of the economy. 

So you might ask....how much extra are we talking about for the Germans to deliver to the EU?  Presently, it's in the 19-billion Euro range (EU's own info page).  This new 1-percent cap business would mean that the German contribution would have to rise to around 29-billion (more or less). 

New taxes?  No one says that.  How would you suddenly have 10-billion extra Euro to hand over....without taxes?  Well....you do this handshake deal where you cut some budget items for airports, streets, university items, and museums....handing that money over to the EU, and they appear to pay for the same items that you just cut. 

You might ask now....well, how much of the present 19-billion Euro does Germany get back?  This is the curious thing....almost 11-billion.  The other eight billion?  It goes to pay for salaries of the EU, agency operation, and then gets split out to various countries who are on the low end of the prosperity world (countries like Lithuania, Estonia, Greece, and Malta).  A country like Estonia could come up with a dozen projects....like some airport renovation project, or some port enhancement project, or some national museum....getting a grant from the EU for their requirement. 

So it you do the math and figure the newer 29-billion Euro package that Germany would ship to the EU yearly....they would probably get back around two-thirds of that (say 18-billion Euro....more or less). 

All without raising taxes?  That's the scripted answer.  But lets remember this key historical fact....since 2008's economic stumble....Germany has enjoyed great trade and commerce, with unemployment down between four and five percent.  As long as this trend continues, this EU contribution situation is not a big deal.