Merkel vows quick deal on German coalition

BERLIN – Chancellor Angela Merkel vowed yesterday to have a new centre-right German government in place within weeks, said tax cuts were possible in 2011 and rejected spending cuts that might strangle an incipient economic recovery.

Voters on Sunday ended the conservative Merkel’s unwieldy right-left ‘grand coalition’ and gave her a comfortable centre-right majority – thanks to a strong performance by her new government ally, the business-oriented Free Democrats.’Germany is entitled to have a new government quickly,’ Merkel said, noting that the country was just emerging from a deep recession. She was meeting later in the day with the Free Democrats’ leader, Guido Westerwelle.Germany celebrates the 20th anniversary of the fall of the Berlin Wall on November 9, and Merkel said she would like to ‘greet (foreign) heads of government on November 9 with a new government.’Sunday’s election outcome nudged Europe’s biggest economy to the right, but with the cautious, consensual Merkel still in charge, it did not appear likely to produce a radical lurch in economic policy.A key plank of Merkel’s election campaign was a pledge to offer moderate middle-income tax relief. The Free Democrats want a more radical overhaul of the tax system, cutting both the top and bottom income tax rates considerably.Westerwelle told reporters yesterday his party would push for a ‘fair’ tax system.Merkel said possible tax cuts could be implemented starting in 2011 or 2012, but gave no details of what they might look like. She argues that cuts would stimulate economic growth and ultimately improve tax revenues.Merkel’s centre-left rivals, the Social Democrats – her partners in the outgoing coalition – had argued that it was a bad idea to cut taxes at a time when the government has run up substantial debts to combat the economic crisis.Yet the chancellor made clear that she doesn’t want to implement painful spending cuts to balance the books.The export-dependent economy returned to slight growth in the second quarter, but is still expected to shrink by 5 percent or more for the whole of this year.’So long as we are in this trough … the question of savings measures is not right,’ Merkel told reporters. ‘We must do everything so that we do not experience what the Americans did at the end of the 30s – namely saving straight into the small upswing that was becoming apparent after the crisis and so breaking this upswing.’During the campaign, both Merkel’s conservatives and the Free Democrats advocating halting a plan to shut down Germany’s 17 nuclear power plants by 2021 and leaving some plants open until more renewable energy becomes available. Merkel declined to detail her plans on that issue Monday. – Nampa-AP