Merkel Challenger Steinbrueck to Focus on Income Gap in Election

Germany’s main opposition Social Democratic Party unveiled an election-year focus on narrowing a growing income divide in Europe’s biggest economy, as it seeks to prevent Chancellor Angela Merkel from winning a third term.

The introduction of a universal minimum wage, tax increases for higher earners, housing and public investment in education will be the SPD’s main election themes, Peer Steinbrueck, Merkel’s main challenger, told reporters today at the conclusion of a two-day party conclave in Potsdam, outside Berlin. The opposition has tabled a debate on the poverty gap in Germany in the lower house of parliament on Jan. 31.

“Mrs Merkel has distanced herself from the real living conditions of Germany today,” said Steinbrueck, who was finance minister in Merkel’s first-term government. “We will campaign on hot-button issues. That’s why we’ll talk about social justice.”

Steinbrueck’s SPD are seeking a formula that allows them to build on their success at regional level to unseat Merkel at federal elections due this fall. While Merkel’s Christian Democratic Union is enjoying near-record poll ratings, the weakness of her Free Democratic Party ally means she can’t rely on a rerun of her current coalition.

Steinbrueck said he wants to spend an additional 3 billion euros ($4 billion) a year on developing affordable housing to counter rising apartment rents in Germany’s biggest cities. He also proposed giving parents a legal entitlement, effective as of 2020, to send their children to all-day elementary schools.

Bertelsmann Study

The SPD leadership cited a study released in December by the Bertelsmann Stiftung and the German Institute for Economic Research showing the number of low-income earners is growing as the middle class shrinks. In 1997, 65 percent of Germans earned between 70 percent and 150 percent of the country’s median income; that group has since shrunk to 58 percent, it found.

“Social cohesion in Germany is in danger as it has become very difficult to move up the social ladder,” said Steinbrueck. “At the same time, living costs are increasing and real salaries are stagnating” as rents and energy costs rise.

Merkel’s difficulty was underlined by a weekly Emnid poll released yesterday showing support for her CDU/CSU bloc at 41 percent, down two percentage points. While that’s easily ahead of the 27 percent backing for the Social Democrats, her Free Democratic partner was below the 5 percent threshold needed to win seats in parliament. With the Greens also unchanged at 13 percent, the poll suggested that neither the CDU-FDP nor the SPD-Greens have sufficient support to form a coalition.

Steinbrueck said that as a one-time finance minister he could guarantee his plans won’t lead to higher public debt. Tax increases for high-income earners, levies on wealth and capital gains will instead allow a broadening of the tax base, he said.

The SPD still faces a challenge in tackling Merkel on financial policy as German voters repeatedly give her top marks for her handling of the euro-area debt crisis. Michael Meister, the CDU parliamentary spokesman, accused Steinbrueck of abandoning the center ground in the pursuit of votes, saying he had “obviously lost all his influence within his party in finance-related issues,” according to an e-mailed statement.

To contact the reporter on this story: Joseph de Weck in Berlin at jdeweck@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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