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More than a year after the election that handed Donald Trump a decisive return victory, the Democratic party has yet to released its postmortem analysis. But, recently, an influential progressive lobby group released its own. Kamala Harris's campaign, its authors argued, did not resonate with core constituencies because it did not focus enough on addressing basic economic anxieties. By prioritising the menace to democracy that Trumpist populism represented, liberals neglected the bread-and-butter issues that were uppermost in many people’s minds.

A Lesson for European Capitals

As the EU braces for a tumultuous period of politics between now and the end of the decade, that is a lesson that needs to be fully absorbed in Brussels, Paris and Berlin. The White House, as its recently published national security strategy makes clear, is optimistic that “nationalist movements in Europe will quickly replicate Mr Trump’s success. Within Europe's core nations, Marine Le Pen’s National Rally (RN) and Alternative für Deutschland (AfD) top the polls, supported by large swaths of working-class voters. But among establishment politicians and parties, it is hard to discern a response that is adequate to challenging times.

Era-Defining Challenges and Expensive Solutions

The challenges Europe faces are expensive and era-defining. They include the war in Ukraine, sustaining the momentum of the green transition, dealing with demographic change and building economies that are more resilient to pressure by Mr Trump and China. As per a Brussels-based thinktank, the new age of global instability could necessitate an additional €250bn in yearly EU defence spending. A significant report last year on European economic competitiveness demanded massive investment in public goods, to be financed in part by collective EU debt.

Such a fiscal paradigm shift would boost growth figures that have stagnated for years.

However, at both the pan-European and national levels, there remains a deficit of courage when it comes to generating funds. The EU’s so-called “frugal” nations resist the idea of collective borrowing, and Brussels’ budget proposals for the next seven years are profoundly timid. In France, the idea of a wealth tax is overwhelmingly popular with voters. Yet the beleaguered centrist government – though desperate to cut its budget deficit – refuses to contemplate such a move.

The Price of Inaction

The truth is that without such measures, the less well-off will bear the brunt of fiscal tightening through austerity budgets and increased inequality. Acrimonious recent conflicts over retirement reforms in both France and Germany testify to a growing battle over the future of the European welfare state – a trend that the RN and the AfD have eagerly leveraged to promote a politics of nativist social policy. Ms Le Pen’s party, for example, has opposed moves to raise the retirement age and has said that it would target any benefit cuts at foreign residents.

Avoiding a Political Gift for Populists

Across the Atlantic, Mr Trump’s pledges to protect blue‑collar interests were largely insincere, as later Medicaid cuts and fiscal benefits for the wealthy demonstrated. Yet without a compelling progressive counteroffer from the Harris campaign, they worked on the campaign trail. Absent a fundamental change in fiscal policy, social contracts across the continent risk being ripped up. Policymakers must steer clear of giving this political gift to the Trumpian forces already on the march in Europe.