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More than a twelve months after the election that handed Donald Trump a decisive comeback victory, the Democratic Party has yet to issued its election autopsy. But, last week, an prominent progressive lobby group published its own. Kamala Harris's campaign, its writers contended, did not resonate with key voter blocs because it failed to concentrate enough on tackling everyday financial worries. In focusing on the menace to democracy that Trumpist populism represented, liberals overlooked the bread-and-butter issues that were uppermost in many people’s minds.

A Lesson for European Capitals

While Europe prepares for a turbulent era of politics between now and 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 indicates, is hopeful that “patriotic” parties in Europe will soon mirror 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 blue-collar voters. But among establishment politicians and parties, it is hard to discern a strategy that is adequate to challenging times.

Era-Defining Challenges and Expensive Solutions

The challenges Europe faces are costly and era-defining. They encompass the war in Ukraine, sustaining the momentum of the green transition, addressing demographic change and developing economies that are less vulnerable 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 major 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 fiscal paradigm shift would boost growth figures that have flatlined for years.

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

The Price of Inaction

The truth is that in the absence of such measures, the less affluent will bear the brunt of fiscal tightening through spending cuts and greater inequality. Acrimonious recent conflicts over retirement reforms in both France and Germany testify to 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 opposed moves to raise the retirement age and has stated that it would target any benefit cuts at foreign residents.

Avoiding a Strategic Advantage for Populists

Across the Atlantic, Mr Trump’s promises to protect blue‑collar interests were deeply disingenuous, as subsequent healthcare reductions and fiscal benefits for the wealthy underlined. But in the absence of a convincing progressive counteroffer from the Harris campaign, they proved effective on the election circuit. Without a fundamental change in fiscal policy, social contracts across the continent risk being torn apart. Policymakers must avoid handing this political gift to the populist movements already on the rise in Europe.