America's Middle Class loved Ronald Reagan, many still do, in fact. He spoke their language, was their kind of person, a man who shifted from acting to politics and made good. Could do no wrong, the true teflon president. America trusted him. When he said that the ten most dangerous words in the English language were "I'm from the government and I'm here to help" they believed him, he was the man who was going to change government, keep it from interfering in their lives in negative ways. When he said "It's your money, you can spend it better than the government can" they strongly backed his tax reduction plans. Elected president in 1980, he launched into Reagonomics, free market, supply-side, low taxation, anti-governmental business regulation beliefs that were prominent during his 8 years in office and have had a lasting influence ever since. Government needed to reverse course, a lot had transpired during the previous decade that had been clearly wrong, the government was looking really bad--the war in Vietnam, Watergate, Nixon resigning in disgrace, long gas lines, the Iranian hostage crisis, etc. A change was needed, Reagan was their man, their hero, he could be trusted. The middle class elected the Gipper, he would fix things. Let's see how it worked out for them.
Reagan's first major economic move was to begin a process of reducing marginal tax rates, especially for those with high incomes. Rates that were 50% at the beginning of his terms were reduced to 28% by the time he left office. During this time the tax rates for the lowest income earners were raised from 11% to 15%. When he entered office the top 10% of yearly income earners were paid 33% of the nation's income, when he left office the top 10% received 40% of the nation's income. When looking at share of the nation's wealth controlled by the top 1%, it rose from 20% to 35% during the Reagan years. In short, only the rich got richer during Reagan's tenure, middle class's share of the nation's income and wealth remained flat, and would later begin to decrease during the George W. Bush years, with his further tax cuts and removal of government regulation of corporate business practices adding to the middle class's financial decline.. Since Reagan, only the wealthy have gained in overall income generation--in the 30 years prior to Reagan, the average US income increased 75%, in the 30 years since Reagan the average income of all but 10% of the highest earners has increased only 1%. Free market economics did allow some people to make a lot of money rapidly, but it clearly has not extended down to the middle class, in fact it has worked against it.
Is there any question why the middle class is suffering? The policies that were central to the development of a strong, vibrant middle class during the late 1940's, '50's, and '60's have been changed or reversed--governmental spending to invest in the future (eg, education through the GI Bill, super-highway construction, supporting a strong public education system elementary through advanced, facilitating responsible labor unions insuring fair worker's rights, having progressive tax rates that allowed the government to support projects serving the common good) have all been reduced or stopped. The reduction of tax rates, the "its your money, you can spend it better" belief led not only to underfunding valuable community needs but also to a subtle "greed is good" belief, as some people began to accumulate massive wealth. Where a CEO in the '60's might draw a salary of 30 or 40 times his average employee, that has commonly risen to where a CEO now might make 400 times or more yearly income than the average employee. In a healthy society, many economists claim the upper 1% might well make 10% of the nation's total income, when that figure rises to 25%, look out for trouble. It had risen to 25% prior to the great depression of the 1930's. The figure was at the 10% mark again when Reagan took office, it was over 15% when he left office, and had risen to near the 25% level in 2008 when the economy collapsed then. It is still near that level. The top 1% controls 40% of the nation's wealth, the top 20% control 85%. Not too much left for the middle class.
Conservatives still complain about "class warfare" whenever the issue of income or wealth inequality is brought up, but in fact a very real, but well hidden, class warfare has been going on since 1980, waged by wealthy interests who wanted still more. Whether Reagan was largely used by these vested, self-serving interests, or whether he was a willing participant, I'll leave it to others to decide. There can be no doubt, however, that Reagan ended up being no real friend or hero to the middle class. It's decline began under his tenure, his policies led the way in unraveling many of the business regulations that were established by Teddy Roosevelt over 100 years ago, leading to savings and loan fraud, financial malfeasance by major institutions collapsing the mortgage market and the economy in 2008, banks becoming "too big to fail" so taxpayer money goes to bailing them out even after they were complicit in shortchanging consumers, and some of the social safety net established by Franklin D. Roosevelt after the Great Depression being dismantled. While many in the middle class still love Reagan, others in retrospect have major misgivings. "We did give you the ball, Gipper, thinking you would be our man in the White House, but damned if you didn't run the wrong way. On second thought, you were our 'Wrong Way Reagan'".
