Schmidt, Lambsdorff roll up sleeves for final showdown

The latest slugfests between West German Chancellor Helmut Schmidt and his economics minister, Otto Lambsdorff, leave the coalition staggering.

Superficially, the quarrel swirls around the cutting of social welfare in a stagnant economy - and the more surprising bone of contention, foreign policy.

More basically, Mr. Lambsdorff's Liberals and Mr. Schmidt's Social Democrats are in the throes of a bitter divorce after 13 years of marriage - and Lambsdorff is using the opportunity to get in some private told-you-sos of his own. The Schmidt-Lambsdorff face-to-face showdown is scheduled for Sept. 17.

These are the bare facts:

The Liberals, for decades the decisive swing party here, are threatened with extinction by falling voter support that could slip under the 5 percent minimum for parliamentary representation in West Germany.

In these urgent circumstances they have increasingly yearned to drop the Social Democrats (who are also falling, though from a much higher base) and renew their old alliance with the conservatives (who are enjoying the unprecedented and growing support of an absolute majority in various opinion polls).

The key dates for the putative switch are presumed to be the late September state election in Hesse and the November convention of the Free Democrats (Liberals). In the meantime, however, the Social Democrats and Liberals in Bonn have been skirmishing with each other - and showing more and more irritation with each other - over every budget that has come up over the past year.

This time around an angry Schmidt dared the Liberals to do more than just snipe at the Social Democrats' budget, make a clean break of it, and show how they would do better.

In mid-September Lambsdorff took up the dare (though he is staying in the Cabinet and in turn defying Schmidt to fire him). He wrote a 34-page blockbuster calling for a reduction in social welfare that not only exceeds anything the Social Democrats could remotely agree to, but also exceeds any cuts ever proposed by West German conservatives (who more or less deem themselves the descendants of Bismarck, that 19th-century introducer of social welfare).

All of Bonn has been in an uproar ever since. A pursed-lip Schmidt has not brought himself to fire Lambsdorff - perhaps partly because Lambsdorff, who is said to have attractive offers in industry, might be all too happy to leave the Cabinet.

The trade unions, scandalized by Lambsdorff's desired slashes in unemployment benefits, have called the economics minister a ''dracula'' who drinks ''the blood of workers.'' Even Lambsdorff's own FDP, glad to be on the offensive for once but squirming before the Hesse election, has treated Lambsdorff's paper as a talking piece only and not endorsed it as a statement of party policy.

Industrialists, too, are keeping rather quiet about the controversy. They welcome Lambsdorff's summons to give business tax breaks and investment incentives at a point when they have just heard the Statistical Office's bad news that 1982 will be the second year in a row with no real economic growth. Managers value good labor relations and the trade unions' wage restraint in the past two years, however, and are not about to destroy that restraint by joining the call for major welfare cuts.

As for the conservatives, they are just sitting back and watching the Social Democrat-Liberal fratricide - plus doing a little cheerleading of their own with a new lawsuit charging the government with exceeding constitutional limits on borrowing.

(The decision will hang on whether the period of zero growth and rising unemployment constitutes enough of a ''disturbance of the overall equilibrium'' to waive the requirement that government debts not exceed investment.)

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