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More than a twelve months after the election that delivered Donald Trump a decisive comeback victory, the Democratic party has still not issued its postmortem analysis. But, last week, an prominent liberal advocacy organization published its own. Kamala Harris's campaign, its writers contended, did not resonate with core constituencies because it did not focus enough on addressing everyday financial worries. In focusing on the threat to democracy that Trumpist populism represented, liberals overlooked the bread-and-butter issues that were foremost in many people’s minds.

A Warning for European Capitals

As the EU braces for a tumultuous period of politics from now until the end of the decade, that is a lesson that needs to be fully understood in European capitals. The White House, as its newly released national security strategy indicates, 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 difficult to see a strategy that is sufficient to troubling times.

Era-Defining Challenges and Expensive Solutions

The issues Europe faces are expensive and historic. They include the war in Ukraine, maintaining the momentum of the green transition, dealing with demographic change and developing economies that are less vulnerable to bullying by Mr Trump and China. According to a Brussels-based research institute, the new age of geopolitical insecurity could require an additional €250bn in yearly EU defence spending. A significant study last year on European economic competitiveness called for substantial investment in public goods, to be financed in part by jointly held EU debt.

Such a economic transformation would stimulate growth figures that have stagnated for years.

However, at both the EU-wide and national levels, there continues to be a lack of boldness when it comes to revenue raising. The EU’s so-called “budget hawks resist the idea of shared debt, and Brussels’ budget proposals for the next seven years are deeply unambitious. In France, the idea of a tax on the super-rich is widely supported with voters. Yet the beleaguered centrist government – though desperate to cut its budget deficit – refuses to contemplate such a move.

The Cost of Political Paralysis

The truth is that in the absence of such measures, the less well-off will pay the price of financial adjustment through austerity budgets and increased inequality. Acrimonious recent conflicts over retirement reforms in both France and Germany highlight a growing battle over the future of the European social model – a trend that the RN and the AfD have happily exploited to promote a politics of nativist social policy. Ms Le Pen’s party, for example, has resisted moves to raise the retirement age and has said that it would focus any benefit cuts at foreign residents.

Preventing a Political Gift for Nationalists

Across the Atlantic, Mr Trump’s pledges to protect working-class interests were deeply disingenuous, as subsequent healthcare reductions and fiscal benefits for the wealthy demonstrated. But in the absence of a compelling progressive counteroffer from the Harris campaign, they proved effective on the election circuit. Absent a fundamental change in fiscal policy, social contracts across the continent are in danger of being torn apart. Policymakers must steer clear of handing this electoral boon to the populist movements already on the rise in Europe.