In March 1969, Social Democrat Gustav Heinemann was elected federal president with the support of both the SPD and the FDP. His election signaled the potential for the two parties to collaborate in a joint governmental coalition, which became a reality just seven months later. After twenty years in the corridors of power, the CDU was banished to the opposition benches for the first time. The catchphrases associated with this governmental change – such as “continuity and renewal,” “no fear of experiments,” “power to enact change,” and “daring more democracy” – provoked both hopes and fears.
In 1971, the SPD’s coalition partners, the Free Democrats, passed a new party platform that completed their ideological reorientation toward “social liberalism.” In 1969, the two parties had launched an ambitious program of domestic reforms that covered education, co-determination, political participation, and family law. The reforms promised greater equality of opportunity and more freedom and democracy. An important focus was the expansion of the social welfare network.
The reality of governing, which involved bruising exchanges with the oppositional CDU/CSU, showed the limits of what was achievable. Increasingly visible economic problems raised the question of whether many of the targeted reforms were financially feasible. Brandt’s resignation in 1974 was only superficially related to the unmasking of his personal advisor as an East German spy; the difficult road to reform had taken its toll. Even so, when the newly elected chancellor Helmut Schmidt assumed office, he could point to his predecessor’s success in expanding the welfare state, despite the fact that this expansion had already begun during the time of the Grand Coalition. In the Federal Republic, social law is an autonomous branch of the legal system, and it had been a long-standing goal of the Social Democrats to standardize social rights and to combine them in a legal code. Between 1975 and 1980, this task was accomplished. The social-policy expert of the CDU, Heiner Geißler, who garnered respect across party lines, directed political attention to the issue of “new” poverty in Germany. Less blatant and more concealed, this type of poverty, he explained, affected millions of citizens nonetheless.
The slowing of economic growth (Chapter 9) and the increase in the unemployment rate to nearly 5 percent in 1975 were further signs that the expansion of the welfare state had reached its limits. Widespread talk of the “crisis of the welfare state” circulated but politicians were reluctant to make deep structural changes for fear of alienating their constituencies. From that point on, fiscal austerity measures were the order of the day; in the 1980s they led to a stabilization of social expenditures under Helmut Kohl’s government. Commentators repeatedly called for a radical reform of the welfare system. At the same time, they doubted whether political leaders had the resolve to undertake such reform, since it would result in benefit reductions and immediately provoke the opposition of organized interest groups.
In the GDR, social policy also proved an important tool in legitimizing the political system. Introduced after the founding of the GDR, the principle of a state-regulated, uniform social insurance provided broad insurance coverage for all, though at a relatively basic level. As part of Honecker’s “unity of economic and social policy,” the insurance system was substantially broadened to include not only supplementary insurance programs for leading figures in the Party, the business community, and society, but also benefits for specific population groups, primarily women and mothers (Chapter 10). Retired workers were the losers of the system, which rewarded gainful employment even in its social policy. Simultaneously, comprehensive price-subsidy programs for food, transportation, medical care, and housing were expanded further. An adequate price-performance ratio proved impossible under these conditions, however. Resulting problems in both the quality and quantity of many basic goods remained until the end of the GDR, drawing increasing complaints from many citizens.
As in the West, the financing of social policy was contingent upon the economic situation. With the continuing deterioration of the GDR economy in the 1980s, party leaders would have been well advised to take a critical look at the popular slogan “unity of economic and social policy,” but this never happened. The report read by Honecker at the last party congress of the SED in 1986 exemplifies the estrangement between the leadership and the people. Economic problems were largely ignored, and the socialist victory Honecker proclaimed lacked credibility.