BERLIN—Chancellor Angela Merkel's conservatives and their Free Democrat (FDP) allies moved closer towards clinching a coalition deal after 12 hours of talks that stretched into early Friday, a conservative leader said.
Horst Seehofer, chairman of the Christian Social Union, told journalists waiting outside the talks they made progress towards an agreement—ahead of a self-imposed Saturday deadline.
"That too," Seehofer said when asked if a deal had been reached on healthcare reform measures that were high on the agenda in Thursday's talks.
The chairman of the CSU, sister party to Merkel's Christian Democrats, was the only one of the three party leaders to talk to reporters after the session ended at 1 a.m. CDU leader Merkel and FDP chairman Guido Westerwelle left through a side entrance.
Merkel's CDU/CSU and the pro business FDP won a parliamentary majority in last month's election. They have been forging compromises since then in talks on a range of issues, from nuclear energy to foreign policy and healthcare.
The three party leaders had spent the hour after midnight huddled alone to thrash out details of their coalition deal.
Earlier, several other leaders told reporters they had moved closer to an agreement after struggling to reconcile their promise of tax cuts with a separate pledge to bring Germany's budget deficit under control.
Merkel wants to be sworn in next week.
"We'll have a result Friday evening or Saturday morning at the latest," said Christian Wulff, a CDU leader and Lower Saxony state premier told reporters outside the talks. "There are a few open issues. It makes sense to take the time to get it right."
Education Spending
Peter Ramsauer, a leader in the CSU added: "We're right on schedule. There are a few things we're stuck on. But we'll wrap it up by Friday evening."
In talks in recent days, the parties came up with the idea of using a special fund outside the federal budget to cover shortfalls of 50 billion euros ($75 billion) or more in state-run unemployment and health insurance schemes. As part of this plan, they wanted to pass a supplementary budget for 2009.
But they abandoned the idea after legal experts raised concerns that the plan, which drew sharp criticism from some economists and opposition parties, may violate Germany's "Basic Law", or post-war constitution.
However, conservatives said they had struck deals to raise spending on education and children in the next parliament.
Volker Kauder, head of the conservatives' parliamentary group, said education spending would be raised by 3 billion euros annually in the coming years.
The CSU said the two sides had agreed on higher tax breaks and benefits for people with children.
Merkel must find an estimated 50 billion euros in order to deliver tax cuts expected to total about 20 billion euros.
But she has ruled out raising unemployment and healthcare contributions, paid by both companies and workers, to plug the budget hole because this would nullify the impact of tax cuts.
Merkel is also refusing to examine sharp cuts in government spending, worried that these would hurt her party's chances of holding on to power in a crucial state election due in May 2010.
