When we speak of the Reagan Legacy, we must first describe the old system being overthrown.
Beginning with the Great Depression of the 1930s, this nation embarked on a program of funneling federal dollars into welfare initiatives. Known as the New Deal, legislation created a safety net to protect society’s most vulnerable members, specifically at that time, the elderly. <?xml:namespace prefix = o ns = “urn:schemas-microsoft-com:office:office” />
The success of the New Deal could be measured by the return of wage levels to their pre-Depression era and the reduction of unemployment from almost 25 percent to nearly zero on the eve of World War II.
By 1949, only a fifth of families were in the lowest earning quintile (or lowest 20 percent). The 1950s witnessed a drop in poverty levels from 32 percent at the start of the decade to 22 percent by decade’s end. Median family income was 43 percent higher in 1959 than in 1950.
During the 1960s, with the War on Poverty and the Civil Rights movement, the income gap (difference between the richest and poorest Americans) continued to narrow as unemployment dropped to a low 4.4 percent and income rose by 38 percent over 1959.
Although racial discrimination continued to exclude portions of the population from participating in the booming economy, still the unemployment rates of black men dropped twice as fast as white men. Increased employment opportunities for African Americans contributed to the poverty level falling by 50 percent within that group, closing the 1960s at 12 percent.
By the 1970s, a multiple of factors began to widen the income gap.
The energy crises following the Arab-Israeli War brought income growth to a halt. By the close of the 1970s, median family income remained at 1973 levels as unemployment continued to rise, reaching 7.5 percent by 1980.
With the start of Reagan’s Revolution in the 1980s, the income gap widened dramatically, while the middle class shrunk.
The Reagan administration is responsible for entrenching neo-liberal economic policies in the United States, which radically changed the distribution of wealth. During the 1980s, the top 10 percent increased their family income by 16 percent, the top 5 percent increased theirs by 23 percent, while the top 1 percent increased their income by 50 percent.
Meanwhile, the bottom 80 percent all lost money, with the bottom 10 percent losing 15 percent of their income, from $4,113 to $3,504.
Reagan is mostly responsible for increasing the income of the top 1 percent from 65 times greater than the bottom 10 percent at the start of his term to 115 times greater by the end of his term.
This Revolution dismantled the New Deal through a supply side philosophy which consisted of cutting, if not eliminating, social services and benefits for the poor while providing tax breaks for the wealthy.
The hope was that economic benefits given to the wealthy would “trickle down” to the poorest. Or as the slogan went: “A rising tide lifts all boats.”
Still, the results of this combination, according to figures published by the Census Bureau, led to the richest among us seeing their inflation-adjusted income rise by 30 percent from the late 1970s to the mid 1990s, while the poorest among us saw their income decrease by 21 percent.
While from 1947 through 1979, real income rose for all segments of society, since 1980 income has only risen for the most affluent families.
Throughout the 1990s, during the so-called economic boom, only the top quintile increased its share of the nation’s income.
From 1979 to 2000, the Congressional Budget Office indicates that the gap between the rich and poor more than doubled as the U.S. experienced the greatest growth of wage inequality known throughout the Western world. These radical economic changes within the U.S. have contributed to the smallest and fastest-shrinking middle class among all industrialized nations.
The year 2000 proved to be the year of the greatest economic disparity since 1979, the year the budget office began collecting such data.
The National Bureau of Economic Research, a nonpartisan, nonprofit research group, claims that the top 1 percent enjoys the largest share of before-tax income for any year since 1929.
By 2002, according to Census Bureau figures, 34.8 million individuals found themselves living in poverty (compare to 25.4 million individuals in 1968), of which 12.2 million were children.
Further contributing to the widening income gap was Clinton’s signing of the 1996 Welfare Reform Act, in effect completing the Reagan Revolution.
Yet as the doomed middle class continue their downward spiral, do they look toward those from economically privileged segments of our society who refuse to work toward a more just society? Those who refuse to recognize their wealth increase is connected to the economic plight of the middle class?
No, downsizing is attributed to scapegoating (i.e., affirmative action and immigrants are the culprits du jour) who are offered up as sacrifices to the gods of capitalism, redeeming the privileged of their sin of hoarding.
Miguel De La Torre, a Cuban American, is professor of theologies of liberation at Hope College in Holland, Mich. He is a graduate of Southern Baptist Theological Seminary and a former Baptist pastor in Kentucky. His column also appears in the Holland Sentinel.
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