The challenge to increased investment consists of bureaucratic barriers to allocating funds, she said, requiring accelerated planning processes.
"At this point we can't spend the money that we have", Merkel said in an interview with ARD television on Sunday. "I don't see the main problem in the question of whether there should be more money - you can and you must do that - but rather accelerating planning".
"We now can not spend the money that we have", Merkel told ARD public broadcaster in an interview, pointing to planning and capacity bottlenecks in the construction industry as well as at the level of regional authorities.
The SPD leader accused the chancellor of "boastfully promising" full employment while not telling voters how she would achieve this.
"Whoever disrupts global supply chains, or even breaks them, will eventually harm all those involved", Merkel said.
Merkel also defended her decision to hold this month's Group of 20 summit in Hamburg, Germany's second-largest city, where some demonstrations against the meeting devolved into violent street battles between police and protesters.
"As far as an upper limit is concerned, my position is clear: I will not accept it", she said, saying that numbers could be reduced by regulation and taking action to prevent the situations that cause people to flee one country for another.
She has regained a commanding lead in opinion polls after Schulz enjoyed a brief surge that took the SPD within touching distance of the Chancellor earlier this year. He riffed off Merkel's common theme that ensuring a balanced budget and restraining debt are a matter of "justice" for future generations.
Germany has been criticized internationally for a lack of domestic spending.
"We have the greatest interest that all nations in the euro area and in the European Union are strong", Merkel responded.
Polls ahead of the September 24 election show Merkel in a strong position.