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More than a year following the election that handed Donald Trump a decisive return victory, the Democratic party has still not released its election autopsy. However, last week, an influential liberal advocacy organization published its own. The Harris campaign, its writers argued, failed to connect with key voter blocs because it did not focus enough on addressing basic economic anxieties. By prioritising the menace to democracy that Trumpist populism represented, progressives neglected the bread-and-butter issues that were foremost in many people’s minds.

A Warning for Europe

While Europe prepares for a turbulent era of politics from now until the end of the decade, that is a lesson 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 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 blue-collar voters. But among establishment politicians and parties, it is difficult to see a response that is adequate to troubling times.

Major Challenges and Costly Solutions

The challenges Europe faces are expensive and historic. They include the war in Ukraine, sustaining the momentum of the green transition, dealing with demographic change and developing economies that are more resilient to bullying 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 called for massive investment in public goods, to be financed in part by jointly held EU debt.

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

However, at both the pan-European 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 collective borrowing, and Brussels’ budget proposals for the next seven years are profoundly unambitious. In France, the idea of a wealth tax is widely supported with voters. But the embattled centrist government – though desperate to cut its budget deficit – refuses to contemplate such a move.

The Cost of Inaction

The reality is that in the absence of such measures, the less well-off 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 welfare state – 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 stated that it would target any benefit cuts at non-French nationals.

Avoiding a Strategic Advantage for Populists

Across the Atlantic, Mr Trump’s promises to protect working-class interests were deeply disingenuous, as later Medicaid cuts and tax breaks for the wealthy underlined. But without a convincing progressive alternative from the Harris campaign, they proved effective on the campaign trail. Absent a radical shift in economic approach, social contracts across the continent risk being torn apart. Policymakers must steer clear of giving this political gift to the populist movements already on the march in Europe.