Risking His Own Welfare
	With plans to cut pension benefits, Gerhard Schröder is finally getting serious about reform. Or is he?
	By CHARLES P. WALLACE | Berlin

Posted Sunday, October 26, 2003; 14.36GMT
The headquarters of Gerhard Schröder's Social Democratic Party was under siege. Thousands of protesters blowing whistles, waving red banners and chanting slogans surrounded the building last week, their anger fueled by the German Chancellor's latest efforts to revamp his country's economy. The new provocation: a vow to cut state pension benefits next year. HANDS OFF OUR PENSIONS, screamed one banner. The demonstrators were a mix of disgruntled union members and the elderly, including a contingent from the Gray Panthers, an advocacy group for the retired that has about 8,000 members in Germany but punches above its weight in policy debates. "It's inconceivable that the generation that rebuilt Germany and paved the way for a pleasant life for the next generation is now treated so shabbily," fumed Panthers' spokesman Norbert Raeder.

The Panthers' rage runs deep. But so does Germany's economic crisis — and it may not be possible to solve it without leaving retirees feeling betrayed. Since World War II, Germans have regarded the state pension scheme as untouchable. Now the aging population and moribund economy make reform essential. To close an j8 billion pension deficit, Schröder froze pensions for next year and announced that nursing-care insurance costs for retirees will be doubled, effectively cutting total benefits. Together with the restructuring of unemployment benefits and revision of the health-care system passed last month, Schröder's moves are slowly adding up to one of the most determined efforts to shake up Germany's welfare state in more than 50 years. Has Schröder — who deftly avoided this sort of painful decision in his first four years in office — finally seen the light?

The Chancellor's critics doubt it, suggesting that Schröder is up to his old trick of tweaking the system at the margins. "There is no coherence behind the reforms," says Jürgen W. Falter, a political scientist at the Institute for Political Science in Mainz. "The idea is to get along, cut costs and muddle through." Falter and others suspect Schröder is just responding to each financial crisis with short-term solutions, rather than implementing a comprehensive reform program to jolt the economy out of its slump.

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