Germany’s Energy Subsidy Scheme Masks Deeper Economic Failures and Risks U.S. Interests

Germany, Europe’s largest economy, is doubling down on costly energy subsidies for heavy industry in a desperate attempt to reverse years of economic stagnation. Chancellor Friedrich Merz’s coalition recently agreed to cap electricity prices at roughly 6 U.S. cents per kilowatt-hour starting January 2025 through 2028—less than half the current market rate—aimed at protecting globally competitive manufacturers from soaring energy costs. At first glance, this intervention may appear as pragmatic support for struggling businesses. Yet beneath the surface lies a cautionary tale about bloated government spending and economic mismanagement that Washington should heed carefully. How long can Germany continue funneling...