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Over a year after the vote that handed Donald Trump a clear-cut return victory, the Democratic party has still not released its election autopsy. But, last week, an prominent liberal advocacy organization released its own. The Harris campaign, its authors 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 foremost in many people’s minds.

A Warning for European Capitals

As the EU braces 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 makes clear, is optimistic that “nationalist movements in Europe will quickly mirror Mr Trump’s success. Within Europe's core nations, Marine Le Pen’s National Rally (RN) and Alternative für Deutschland (AfD) lead the polls, backed by significant segments of blue-collar voters. Yet among establishment politicians and parties, it is difficult to see a strategy that is adequate to challenging times.

Major Problems and Expensive Solutions

The issues Europe faces are expensive and era-defining. They encompass 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. As per a Brussels-based thinktank, the new age of geopolitical insecurity could necessitate an additional €250bn in annual EU defence spending. A significant study last year on European economic competitiveness demanded massive investment in public goods, to be financed in part by jointly held EU debt.

Such a fiscal paradigm shift would stimulate growth figures that have stagnated 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 shared debt, and Brussels’ budget proposals 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 well-off will pay the price of financial adjustment through spending cuts and greater inequality. Bitter recent disputes over retirement reforms in both France and Germany testify to a developing struggle over the future of the European welfare state – a phenomenon that the RN and the AfD have happily exploited to promote a politics of welfare chauvinism. 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 non-French nationals.

Preventing a Strategic Advantage for Nationalists

In the US, Mr Trump’s pledges to protect blue‑collar interests were largely insincere, as subsequent Medicaid cuts and fiscal benefits for the wealthy underlined. But without a convincing progressive counteroffer from the Harris campaign, they proved effective 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 electoral boon to the populist movements already on the march in Europe.