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More than a year following the election that delivered Donald Trump a clear-cut comeback victory, the Democratic Party has yet to issued its postmortem analysis. However, recently, an influential progressive lobby group published its own. Kamala Harris's campaign, its authors argued, did not resonate with key voter blocs because it failed to concentrate enough on addressing everyday financial worries. In focusing on the threat to democracy that Trumpist populism represented, progressives neglected the bread-and-butter issues that were uppermost in many people’s minds.

A Lesson 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 absorbed in Brussels, Paris and Berlin. The White House, as its newly released national security strategy indicates, is hopeful that “patriotic” parties 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 significant segments 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 Problems and Expensive Solutions

The challenges Europe faces are expensive and historic. They encompass the war in Ukraine, sustaining the momentum of the green transition, addressing demographic change and developing economies that are more resilient to bullying by Mr Trump and China. According to a Brussels-based thinktank, the new age of global instability could necessitate an additional €250bn in yearly EU defence spending. A significant study last year on European economic competitiveness demanded substantial investment in public goods, to be partly funded by collective EU debt.

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

But, at both the EU-wide and national levels, there continues to be a deficit of courage when it comes to revenue raising. The EU’s so-called “budget hawks oppose the idea of shared debt, and Brussels’ budget proposals for the next seven years are deeply unambitious. In France, the idea of a wealth tax is overwhelmingly popular with voters. Yet the embattled centrist government – while desperate to cut its budget deficit – will not consider such a move.

The Price of Political Paralysis

The truth is that without such measures, the less affluent will bear the brunt of financial adjustment through spending cuts and increased inequality. Bitter recent conflicts over retirement reforms in both France and Germany highlight a developing struggle 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 non-French nationals.

Preventing a Political Gift for Populists

Across the Atlantic, Mr Trump’s pledges to protect working-class interests were largely insincere, as subsequent 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 fundamental change in fiscal policy, social contracts across the continent are in danger of being ripped up. Governments must steer clear of giving this political gift to the populist movements already on the rise in Europe.