25
are indeed different majorities in the Bundestag and Bundesrat (for most of the time in the
1990s and thereafter) and when the nature of policy proposals requires mandatory consent-
ing legislation (necessitating Bundesrat approval).25 The federalism veto point arguably
leads to imperatives for consensual reform (which often means that policy preferences of
interest groups and/or particular party factions are accommodated) and to an implicit ‘grand
coalition’ in German reform politics between the government and the opposition (Schmidt
2003; Trampusch 2005). However, at the same time, its importance should not be over-
stated, as the blocking potential of federal structures is arguably conditional on the differ-
ence in preferences between political actors (Manow 2005).26
Furthermore, German policy-making also takes place within the context of a strong role for
the law and the judiciary. This feature makes for a powerful restriction on the competences
of parliament, especially for the role played by the Federal Constitutional Court, leading to
a situation in which governance can be characterized as ‘governing with judges’ or even
‘governing by judges’ (Schmidt 2003: 128). As far as corporatist structures are concerned,
Germany has traditionally featured strong relations between the state and between societal
interest groups. In the post-war era, labour relations became based on social partnership, on
collective bargaining between employers and trade unions without state interference, as
well as on the corporation of these social partners in both implementation and administra-
tion of welfare state policies (Armingeon 1994). At the same time, formal (or institutional-
ized) and informal channels of interest groups also try to influence policy-making, forming
policy communities that are typically located at the level of policy sectors (Dohler/Manow
1997; Czada 2003).
Given the country’s array of institutional constraints on government activity, this fosters a
sense of immobility, as Schmidt (2003: 202) puts it: ‘policy change in domestic politics in
Germany usually requires a longer planning period, is often incremental in nature, and bor-
ders occasionally on a degree of institutional inertia, which critics describe as Reformstau.
It is said to apply social policy-making in particular, since another set of institutional obsta-
cles reinforces the constraints of the political-institutional context.
25 The latter is frequently the case with social policy legislation, as long as it touches administrative issues
or financing issues that concern the interests of the Lander.
26 According to Manow, ‘the veto point argument crucially depends on the assumption of significant
differences in policy preferences between the different veto players/parties’. Furthermore, such difference
cannot simply be assumed in the German context, as the preferences of Christian Democrats and Social
Democrats on the welfare state used to be rather similar well into the 1990s. Even in the current context
of the German debate about welfare state restructuring, he argues that ‘what hinders reform efforts is not
so much the blocking effect of federal structures, but rather the dynamics of inter-party competition’
(2005: 224 f.).