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Associated Press ^ | Dec 28, 2002 | Tony Czuczka Posted on 12/28/2002 11:53:03 AM PST by 8 jimbo123 BERLIN (AP) - They re-elected him only in September, but these days Germans who voted Chancellor Gerhard Schroeder back into office are letting their anger flow freely - workers, corporate bosses, even his political allies. Insurance salesman Guenter Pehnemann grouses about the tax hikes Schroeder said he wanted to avoid, then announced by the dozen after his re-election. Physiotherapist Claudia Muhlke supports Schroeder, but complains of a "chaotic" government with no apparent strategy for reviving the economy and keeping Germany's costly social safety net from going bust. The complaints echo those of millions of Germans whose loss of faith in their 58-year-old leader has sent his approval ratings plunging from a pre-election 55 percent to as low as 33 percent and even forced him to slap down media speculation that he might quit. Schroeder's Social Democrats and their coalition partner, the Greens, eked out a narrow victory Sept. But discontent over taxes has eclipsed war worries since then. But conservative opponents are calling it "election fraud" and demanding a parliamentary inquiry, and a rap song satirizing the chancellor as a tax-grabber tops the German charts. Schroeder's hastily drafted revenue-raising plans hit so far and wide that Germans find plenty to be outraged about. Plane tickets, flowers, heating oil - all are set to become more expensive next year, and a popular government subsidy for homebuilders is to be slashed by nearly $3,000. Even a children's favorite is being targeted: "Surprise eggs," chocolate candies with a toy inside, are taxed as food, but will now be slapped with the full rate for toys, upping the price 8 percent to 54 cents. The rush to raise taxes has also raised alarm bells among Greens. Schroeder's troubles are raising deeper questions about the future of a welfare-state economy that is among Europe's most generous, but takes about 40 percent of a single-earner household's income in payroll and income taxes, plus an income tax surcharge to rebuild formerly communist East Germany, and even a "church tax" to finance congregations of Germany's various faiths. As the population ages and the birthrate dwindles, many wonder who will replenish the coffers. And Germany has the added burden of being looked to by the rest of Europe to pull the continent's economy. Launched in the 19th century by conservative chancellor Otto von Bismarck to blunt the rise of socialism, the welfare system has steadily grown since World War II to encompass cradle-to-grave coverage. One-time payments range from "motherhood money," up to $1,670 to help offset costs of bringing home a new baby, to "burial money" of around $1,000 toward funeral costs. There's free school tuition and health care, subsidized spa visits and help with the rent. The state will pay up to two-thirds of your salary for two years and eight months. Construction workers, meanwhile, can ask for "winter money" to tide them over during the cold months. Nearly every second euro spent in Germany is spent by the government, the majority for social programs. In the United States, government's share of spending is about a third. Some programs have actually become more generous under Schroeder, like the subsidy for families that lets parents of all incomes claim at least $157 a month per child, besides motherhood money. Economists have argued for years that trimming benefits would help lift Europe's biggest economy, stuck at near-zero growth and a 9 percent jobless rate. But Schroeder, whose party depends on labor union support, has avoided addressing the issue head-on. Instead, soon after the election the government ordered a 2 percent hike in the payroll tax that finances retiree benefits. Already, experts say more increases are virtually inevitable. Schroeder's conservative predecessor, Helmut Kohl, also bucked the persistent call for overhauling the welfare system, resisting cuts in benefits for 16 years. When he finally took action near the end of his term, he provoked howls of protest, and as soon as Schroeder was elected in 1998, he revoked the measures. Some Social Democrats, keen to preserve their image as defenders of the welfare state, have suggested Germans can stand even more taxes than Schroeder has imposed. Physiotherapist Muhlke said she had no regrets about voting for a second term for Schroeder, yet she too found something to fault: a planned 50 percent rise in a tax on people using a company car.
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