Steady, Go!

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Stoiber won additional support by announcing plans to create a new super ministry combining economics, labor and responsibility for eastern Germany. He named Lothar Spaäth, the former premier of Baden-Württemberg, to be head of the ministry if Stoiber wins. Spaäth is the widely admired chief executive of Jenoptick, a high-tech manufacturer he helped create out of the ashes of East German industry. Stoiber said rebuilding the east is key to improving Germany's economy. But the CDU/CSU's support is weakest in the east.

Stoiber has proposed a sweeping economic reform cutting personal income-tax rates to below 40%, reducing the government share of GDP to under 40% and holding social contributions to less than 40% of wages, a program he calls "three times 40." "We want the people in Germany to have more money in their pockets," Stoiber said last month. "A lower burden of contributions and taxes results in higher incentives to do well." Schröder complained that implementing the plan would cost the treasury j170 million, which he said the country couldn't afford.

Despite Stoiber's promises, the conservatives have not won unanimous support from big business, as might be expected from a center-right party. One reason is that Stoiber and his CDU colleagues have promised to overturn one of Schröder's principal reforms: ending capital-gains tax on sales of shares by corporations. Stoiber contends the change was unfair to small and mid-sized companies that could not take advantage of it. But the measure is widely supported by the nation's banks and insurance firms, which still have large cross-holdings in major German companies. Stoiber also said he was against adopting American-style regulations to free up the labor market, saying he does "not stand for hire-and-fire conditions in Germany."

Stoiber criticized the government's financial management, trying to blame Schröder for an 89% drop — from a peak in 2000 — in the share price of Deutsche Telekom, Europe's largest phone company. Shares in the firm were widely purchased as a first-time stock market investment by many Germans. Stoiber complained that small shareholders had seen their investment evaporate while the company's managers earned hefty salaries. Schröder lamely responded that the government owns only 43% of Deutsche Telekom's shares and is powerless to set policy at the company or fire nonperforming executives.

In response to Stoiber's economic plans, Schröder has come out in favor of a special commission's findings on the unemployment challenge. The 15-member panel, headed by Volkswagen executive Peter Hartz, proposed making a large number of the jobless into virtual employees of state employment offices, which would act as temporary job agencies, placing people in short-term jobs. The commission said that unemployment could be cut in half if its proposals were implemented, and Schröder said he "liked the direction the overall concept takes."

Schröder and Stoiber did not spend much time debating pressing social issues, such as Stoiber's opposition to increased immigration or fears about crime. Stoiber at one point even said he had no differences with Schröder over foreign policy, a sign of remarkable nonpartisanship. The two candidates will appear in further debates — this time televised — in August and September. With poll results so close, both will be looking for new issues to help invigorate a staid campaign. Being polite doesn't count for much in the heat of an election.