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Over a year following the vote that delivered Donald Trump a clear-cut return 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 authors argued, did not resonate with core constituencies because it did not focus enough on addressing everyday financial worries. In focusing on the menace to democracy that Trumpist populism represented, progressives overlooked the kitchen-table concerns that were foremost in many people’s minds.

A Warning for Europe

As the EU braces for a tumultuous period of politics between now and the end of the decade, that is a message that needs to be fully understood in Brussels, Paris and Berlin. The White House, as its newly released national security strategy indicates, is optimistic that “nationalist movements in Europe will soon 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 significant segments of working-class voters. Yet among establishment politicians and parties, it is difficult to see a response that is adequate to troubling times.

Era-Defining Challenges and Expensive Solutions

The challenges Europe faces are expensive and era-defining. They include the war in Ukraine, maintaining the momentum of the green transition, dealing with demographic change and developing economies that are more resilient to pressure by Mr Trump and China. According to a Brussels-based research institute, the new age of global instability could require an additional €250bn in annual EU defence spending. A significant study last year on European economic competitiveness demanded massive investment in shared infrastructure, to be partly funded by jointly held EU debt.

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

However, at both the EU-wide and national levels, there continues to be a deficit of courage when it comes to generating funds. The EU’s so-called “budget hawks oppose the idea of shared debt, and EU spending plans for the next seven years are profoundly timid. In France, the idea of a tax on the super-rich is overwhelmingly popular with voters. Yet the embattled centrist government – though desperate to cut its budget deficit – refuses to contemplate such a move.

The Cost of Inaction

The truth is that in the absence of such measures, the less affluent will bear the brunt of financial adjustment through austerity budgets and increased inequality. Bitter recent disputes over pension cutbacks in both France and Germany testify to a developing struggle 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 non-French nationals.

Avoiding a Political Gift for Populists

Across the Atlantic, Mr Trump’s promises to protect working-class interests were largely insincere, as subsequent healthcare reductions and tax breaks for the wealthy underlined. Yet in the absence of a convincing progressive alternative from the Harris campaign, they worked on the election circuit. Absent a radical shift in fiscal policy, social contracts across the continent risk being torn apart. Policymakers must steer clear of handing this political gift to the populist movements already on the march in Europe.