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More than a twelve months following the election that delivered Donald Trump a clear-cut return victory, the Democratic party has still not released its postmortem analysis. However, recently, 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 tackling everyday financial worries. By prioritising the threat to democracy that Trumpist populism represented, liberals neglected the bread-and-butter issues that were foremost in many people’s minds.

A Warning for Europe

As the EU braces for a tumultuous period of politics from now until the end of the decade, that is a message that must be fully understood in European capitals. The White House, as its recently published national security strategy makes clear, is hopeful that “nationalist movements in Europe will soon replicate Mr Trump’s success. In the EU’s core nations, Marine Le Pen’s National Rally (RN) and Alternative für Deutschland (AfD) lead the polls, supported by large swaths of working-class voters. But among establishment politicians and parties, it is difficult to see a response that is sufficient to challenging times.

Major Problems and Expensive Solutions

The challenges Europe faces are costly and historic. They include the war in Ukraine, maintaining the momentum of the green transition, addressing demographic change and developing economies that are more resilient to pressure by Mr Trump and China. According to a European research institute, the new age of geopolitical insecurity could necessitate an additional €250bn in yearly EU defence spending. A major study last year on European economic competitiveness demanded massive investment in shared infrastructure, to be financed in part by collective EU debt.

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

However, at both the EU-wide and national levels, there remains a lack of boldness when it comes to revenue raising. The EU’s so-called “frugal” nations oppose the idea of collective borrowing, and Brussels’ budget proposals for the next seven years are profoundly unambitious. In France, the idea of a tax on the super-rich is overwhelmingly popular with voters. But the embattled centrist government – while desperate to cut its budget deficit – refuses to contemplate such a move.

The Price of Political Paralysis

The truth is that without such measures, the less well-off will pay the price of fiscal tightening through austerity budgets and greater inequality. Bitter recent disputes over retirement reforms in both France and Germany highlight a growing battle over the future of the European social model – a phenomenon 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 resisted moves to raise the retirement age and has said that it would focus any benefit cuts at foreign residents.

Avoiding a Political Gift for Nationalists

In the US, Mr Trump’s pledges to protect blue‑collar interests were largely insincere, as later Medicaid cuts and tax breaks for the wealthy demonstrated. Yet in the absence of a compelling progressive counteroffer from the Harris campaign, they proved effective on the election circuit. Without a radical shift in fiscal policy, social contracts across the continent risk being torn apart. Policymakers must steer clear of giving this electoral boon to the populist movements already on the march in Europe.