A special fund is the wrong construct to finance permanently higher public investment in infrastructure or education. As a matter of principle, permanent tasks should always be financed via the core budget. In addition, a special fund overrides democratic control mechanisms to a certain extent, as it is not subject to the same transparency and accountability requirements as the regular budget, in which parliaments have a much greater say. Thirdly, special funds at the national level can lead to conflicts with European rules and thus also undermine joint European agreements.

As a scientist who works based on evidence, I do recognise the urgent need for significantly higher public investment. Without these and other reforms, the transformation of the German economy will not succeed; many good jobs and prosperity will be lost. The special fund is certainly not the best solution, but it is better than continuing to do nothing and managing economic decline. We at DIW Berlin already pointed out the investment gap in Germany in several studies twelve years ago. At that time, there was an economic boom and our analyses were largely ignored. Today, it is all the more urgent that politics and business now take action.

A major weakness of the special fund – even after the agreed adjustments – is indeed the danger that expenditure will be shifted and that the new money will be used not only for additional investments but also for consumer spending. I find the actions of the CDU/CSU and SPD almost unbelievable: Only a few days after presenting their plans for the special fund, they announced after the first exploratory talks that they wanted to spend an additional 64 billion euros each year on pensions and other election gifts, as well as tax cuts.

However, it is not impossible. In addition, there was no mention of tax increases or spending cuts, nor was it pointed out that the federal budget is already heavily in deficit and gaps need to be closed. The CDU/CSU and SPD have made concessions, but I still have great doubts as to whether they will be implemented with integrity. Especially as the public sector – particularly at the municipal level– cannot implement such large sums in investment.

We urgently need an independent fiscal council that has access to relevant data, and can document the extent to which the federal government's promises are being honoured. The special fund must not lead to accountability and transparency being thrown overboard.

We Germans have an obsession with debt and saving. To call the coalition partners' financial package a debt package misses the point. Debt is the mirror image of savings. Germany's problem today is not that the state has too much explicit public debt through loans and bonds – the public debt ratio of 63% is the lowest of the major industrialised countries, and also rather low in absolute terms. Rather, the problems lie in other areas.

For one thing, public assets have shrunk over the last 25 years. The state's net investments have been consistently negative every year, meaning that the state has been living off its assets and the framework conditions for private investment have become too poor. On the other hand, there is considerable implicit government debt in the form of obligations in the social security systems, primarily towards baby boomers. The Market Economy Foundation has estimated this implicit public debt at 300% of annual economic output. Even if such calculations are based on many assumptions, I believe they are realistic, and the difference in explicit government debt clearly shows where the real problem lies.

Germany's problem today is not that the welfare state is too big. The social market economy with its concept of solidarity and shared security is a great strength and the basis of our economic prosperity. I believe that calls for across-the-board cuts to the welfare state – for example through cuts to citizens' benefits, pensions or care and health – are wrong and harmful. On the one hand, social systems need to become more efficient and, on the other, the issue of distribution needs to be addressed. There is an imbalance here. The political response to demographic change has almost always been an even greater redistribution from young to old. This is now causing economic damage that needs to be corrected.

Certainly to a certain extent, by allowing baby boomers to forego some benefits, for example by raising the retirement age for those who can work. But above all, we need less redistribution from young to old and more redistribution from rich to poor. People with low incomes have a life expectancy of 5 to 6 years less when they retire than people with high incomes. In short, we urgently need reforms to our social security systems that allow strong shoulders to bear a greater share of the burden while maintaining the principle of solidarity.

The expansion of private pension provision is an urgently needed element of reform. The Ampel government had good ideas for this. A private pension scheme, as in Sweden, would be a good approach. However, the state must ensure that state funds are targeted precisely at those who need the help. Unlike in the past, for example, through the Riester pension scheme, it should not primarily be insurance companies and high earners who benefit, but people on low incomes.

The solidarity surcharge should have been abolished long ago, as it is a misappropriation of funds. In addition to a major reform of the social systems, fundamental tax reform is the second central task for the new federal government. There is hardly any other country that taxes labour more and wealth less than Germany. For me, this is less about fairness than about efficiency.

Our tax system creates huge disincentives. Above all, it reduces the incentives to work for people with medium and low incomes, and promotes passive wealth accumulation. The new federal government should significantly reduce the burden on low and middle incomes and reduce disincentives, such as high transfer withdrawal rates, while at the same time taxing large fortunes more heavily. In short, it should cancel almost all of its election promises, as most of them were aimed at easing the burden on top earners and large fortunes. I hope that the new federal government will have the courage to break with old vested interests and powerful interests and seize the opportunity for fundamental reforms.