German parties agree deal to loosen debt limit, expand defense spending as Europe called to do more

BERLIN (AP) — German lawmakers reached an agreement on Friday to exempt some defense spending from the nation’s tight rules on running up debt as European leaders are scrambling to shore up the continent's defenses themselves in the face of a Trump administration that is threatening to back out.

The debate over the deal cast defense spending as an issue of growing urgency as doubts increase about the U.S. commitment to European allies. Long-term strains on Germany's debt limits, combined with the recent shift in U.S. security policy under President Donald Trump, pushed the negotiations into a deal that now goes before the parliament.

Friedrich Merz, the conservative leader and Germany's likely next chancellor, announced the deal. Merz's Union bloc, outgoing Chancellor Olaf Scholz’s center-left Social Democrats and the Greens joined together for the agreement.

The group seeks to loosen Germany’s so-called “debt brake” — which allows new borrowing worth only 0.35% of annual gross domestic product — in order to spend more on defense. They also want to set up a 500 billion euros ($533 billion) investment fund, financed by borrowing, to pour money into Germany’s creaking infrastructure over the next 12 years and help restore the economy to growth.

Merz told a news conference the defense deal was “a clear message to our partners and friends, but also to our opponents, the enemies of our freedom, we are capable of defending our selves and we’re fully prepared for that."

He added: "There will be no lack of financial means to defend freedom and peace on our continent.”

In a concession to the Greens, the agreement also includes 100 billion euros from the investment fund for climate-related spending, up from 50 billion euros in Thursday's debate.

Merz said the compromise was achieved by expanding the scope of the defense spending exemption to include funding for civil defense, intelligence agencies, cyber defense and assistance to Ukraine. The deal would also add provisions to the investment fund to ensure that it was not simply used to pay for already approved projects but would mean additional, new investment — a key concern expressed by the Greens.

If passed, this could enable more than 1 trillion euros in new borrowing and spending over 12 years.

Katharina Dröge, co-leader of the Greens parliamentary group, on Friday said the deal ensured that the infrastructure fund money “would actually be invested in the future, in a modern country that actually functions, and in climate protection.”

The provisions that the fund would be used for entirely new investment meant that “we could establish that hundreds of millions of euros out of the state budget wouldn’t be used instead to fund tax cuts, that’s not what the reform is for,” Dröge told a news conference announcing the deal.

The Greens, during Thursday's parliamentary debate, criticized Merz for repeatedly rejecting their previous recommendations to reform the debt brake to ease investment in the economy and measures against climate change.

But Merz and Scholz needed the Greens' votes in order to achieve a two-thirds majority in parliament because the debt brake is anchored in the constitution. Merz and Scholz’s parties sought to get a deal through the outgoing parliament, rather than the newly elected one since parties that could agree to the plans have just over one-third of the seats.

The outgoing German parliament is expected to vote on the measure Tuesday. The incoming lawmakers take their seats March 25.

Opponents of increasing the debt brake for defense, such as the far-right, anti-immigration Alternative for Germany party, say the debate should take place after the incoming parliament is seated — to reflect the will of the voters.

Merz's Union bloc and Scholz’s Social Democrats are currently in the middle of negotiations to form a governing coalition. __

McHugh reported from Frankfurt, Germany.

Friedrich Merz, CDU/CSU parliamentary group leader in the Bundestag and CDU federal chairman, makes a statement after the parliamentary group meeting in the Bundestag, Berlin, Friday, March 14, 2025. (Michael Kappeler/dpa via AP)

German opposition leader and Christian Democratic Union party chairman Friedrich Merz, center, delivers his speech during a meeting of the German federal parliament, Bundestag, at the Reichstag building in Berlin, Germany, Thursday, March 13, 2025. (AP Photo/Ebrahim Noroozi)

Friedrich Merz, leader of the Christian Democratic Union, right, and Social Democratic Party leader Lars Klingbeil talk during a meeting of the German federal parliament, Bundestag, at the Reichstag building in Berlin, Germany, Thursday, March 13, 2025. (AP Photo/Ebrahim Noroozi)

Friedrich Merz, CDU/CSU parliamentary group leader in the Bundestag and CDU federal chairman, speaks at the start of the parliamentary group meeting in the Bundestag, Berlin, Friday, March 14, 2025. (Michael Kappeler/dpa via AP)

Friedrich Merz, right, CDU/CSU parliamentary group leader in the Bundestag and CDU federal chairman, makes a statement after the parliamentary group meeting in the Bundestag, Berlin, Friday, March 14, 2025. (Michael Kappeler/dpa via AP)

Friedrich Merz, CDU/CSU parliamentary group leader in the Bundestag and CDU federal chairman, makes a statement after the parliamentary group meeting in the Bundestag, Berlin, Friday, March 14, 2025. (Michael Kappeler/dpa via AP)

Friedrich Merz, CDU/CSU parliamentary group leader in the Bundestag and CDU federal chairman, makes a statement after the parliamentary group meeting in the Bundestag, Berlin, Friday, March 14, 2025. (Michael Kappeler/dpa via AP)

WASHINGTON (AP) — Becky Pepper-Jackson finished third in the discus throw in West Virginia last year though she was in just her first year of high school. Now a 15-year-old sophomore, Pepper-Jackson is aware that her upcoming season could be her last.

West Virginia has banned transgender girls like Pepper-Jackson from competing in girls and women's sports, and is among the more than two dozen states with similar laws. Though the West Virginia law has been blocked by lower courts, the outcome could be different at the conservative-dominated Supreme Court, which has allowed multiple restrictions on transgender people to be enforced in the past year.

The justices are hearing arguments Tuesday in two cases over whether the sports bans violate the Constitution or the landmark federal law known as Title IX that prohibits sex discrimination in education. The second case comes from Idaho, where college student Lindsay Hecox challenged that state's law.

Decisions are expected by early summer.

President Donald Trump's Republican administration has targeted transgender Americans from the first day of his second term, including ousting transgender people from the military and declaring that gender is immutable and determined at birth.

Pepper-Jackson has become the face of the nationwide battle over the participation of transgender girls in athletics that has played out at both the state and federal levels as Republicans have leveraged the issue as a fight for athletic fairness for women and girls.

“I think it’s something that needs to be done,” Pepper-Jackson said in an interview with The Associated Press that was conducted over Zoom. “It’s something I’m here to do because ... this is important to me. I know it’s important to other people. So, like, I’m here for it.”

She sat alongside her mother, Heather Jackson, on a sofa in their home just outside Bridgeport, a rural West Virginia community about 40 miles southwest of Morgantown, to talk about a legal fight that began when she was a middle schooler who finished near the back of the pack in cross-country races.

Pepper-Jackson has grown into a competitive discus and shot put thrower. In addition to the bronze medal in the discus, she finished eighth among shot putters.

She attributes her success to hard work, practicing at school and in her backyard, and lifting weights. Pepper-Jackson has been taking puberty-blocking medication and has publicly identified as a girl since she was in the third grade, though the Supreme Court's decision in June upholding state bans on gender-affirming medical treatment for minors has forced her to go out of state for care.

Her very improvement as an athlete has been cited as a reason she should not be allowed to compete against girls.

“There are immutable physical and biological characteristic differences between men and women that make men bigger, stronger, and faster than women. And if we allow biological males to play sports against biological females, those differences will erode the ability and the places for women in these sports which we have fought so hard for over the last 50 years,” West Virginia's attorney general, JB McCuskey, said in an AP interview. McCuskey said he is not aware of any other transgender athlete in the state who has competed or is trying to compete in girls or women’s sports.

Despite the small numbers of transgender athletes, the issue has taken on outsize importance. The NCAA and the U.S. Olympic and Paralympic Committees banned transgender women from women's sports after Trump signed an executive order aimed at barring their participation.

The public generally is supportive of the limits. An Associated Press-NORC Center for Public Affairs Research poll conducted in October 2025 found that about 6 in 10 U.S. adults “strongly” or “somewhat” favored requiring transgender children and teenagers to only compete on sports teams that match the sex they were assigned at birth, not the gender they identify with, while about 2 in 10 were “strongly” or “somewhat” opposed and about one-quarter did not have an opinion.

About 2.1 million adults, or 0.8%, and 724,000 people age 13 to 17, or 3.3%, identify as transgender in the U.S., according to the Williams Institute at the UCLA School of Law.

Those allied with the administration on the issue paint it in broader terms than just sports, pointing to state laws, Trump administration policies and court rulings against transgender people.

"I think there are cultural, political, legal headwinds all supporting this notion that it’s just a lie that a man can be a woman," said John Bursch, a lawyer with the conservative Christian law firm Alliance Defending Freedom that has led the legal campaign against transgender people. “And if we want a society that respects women and girls, then we need to come to terms with that truth. And the sooner that we do that, the better it will be for women everywhere, whether that be in high school sports teams, high school locker rooms and showers, abused women’s shelters, women’s prisons.”

But Heather Jackson offered different terms to describe the effort to keep her daughter off West Virginia's playing fields.

“Hatred. It’s nothing but hatred,” she said. "This community is the community du jour. We have a long history of isolating marginalized parts of the community.”

Pepper-Jackson has seen some of the uglier side of the debate on display, including when a competitor wore a T-shirt at the championship meet that said, “Men Don't Belong in Women's Sports.”

“I wish these people would educate themselves. Just so they would know that I’m just there to have a good time. That’s it. But it just, it hurts sometimes, like, it gets to me sometimes, but I try to brush it off,” she said.

One schoolmate, identified as A.C. in court papers, said Pepper-Jackson has herself used graphic language in sexually bullying her teammates.

Asked whether she said any of what is alleged, Pepper-Jackson said, “I did not. And the school ruled that there was no evidence to prove that it was true.”

The legal fight will turn on whether the Constitution's equal protection clause or the Title IX anti-discrimination law protects transgender people.

The court ruled in 2020 that workplace discrimination against transgender people is sex discrimination, but refused to extend the logic of that decision to the case over health care for transgender minors.

The court has been deluged by dueling legal briefs from Republican- and Democratic-led states, members of Congress, athletes, doctors, scientists and scholars.

The outcome also could influence separate legal efforts seeking to bar transgender athletes in states that have continued to allow them to compete.

If Pepper-Jackson is forced to stop competing, she said she will still be able to lift weights and continue playing trumpet in the school concert and jazz bands.

“It will hurt a lot, and I know it will, but that’s what I’ll have to do,” she said.

Heather Jackson, left, and Becky Pepper-Jackson pose for a photograph outside of the U.S. Supreme Court in Washington, Sunday, Jan. 11, 2026. (AP Photo/Jose Luis Magana)

Heather Jackson, left, and Becky Pepper-Jackson pose for a photograph outside of the U.S. Supreme Court in Washington, Sunday, Jan. 11, 2026. (AP Photo/Jose Luis Magana)

Becky Pepper-Jackson poses for a photograph outside of the U.S. Supreme Court in Washington, Sunday, Jan. 11, 2026. (AP Photo/Jose Luis Magana)

The Supreme Court stands is Washington, Friday, Jan. 9, 2026. (AP Photo/J. Scott Applewhite)

FILE - Protestors hold signs during a rally at the state capitol in Charleston, W.Va., on March 9, 2023. (AP Photo/Chris Jackson, file)