The American economy has had its best days, but it’s long gone, and future better days are hardly a certainty.
The “American Dream” concept from the 20th century, where a sizable majority of Americans could become or aspir to become middle-class, wealthy, or even extremely wealthy, is largely dead in the second half of the 21st century.
The richest 10% of Americans (households with annual incomes of at least $250,000) accounted for half of all US consumer spending between September 2023 and September 2024, according to a report from Moody’s Analytics in February.
It truly amazes me how much of the nation’s population can actually outspend the vast majority of it. It signals the end of a system that, since World War II, has largely relied on the discretionary and needs-based spending of regular, working Americans.
However, for tens of millions of Americans, this is not a surprise, which is the biggest surprise of all at the end of the American dream. The American dream and consumer capitalism that were at the center of the nation’s development from 1945 until the housing bubble burst in 2008, which started more than 50 years ago, have been dismantled.
Social mobility was undermined by the gradual austerity that the wealthy and corporations have been subject to, especially among Americans who are impoverished, with the addition of numerous rounds of tax breaks.
The American middle class has become a class of strugglers and not strivers as a result of the transition from manufacturing to the service industry jobs, along with automation, regional shifting, downsizing, and the offshoring of millions of other jobs. The worst part is that this is precisely what the wealthiest Americans have desired for decades.
Most experts agree that the average American’s economic power reached its highest level between 1970 and 1974. More than six out of ten Americans were able to become middle-class citizens, and Black, Latinx, and other people of color were also gaining more ground in the US middle class.
According to the legend, the US economy was slowed down by the US’s support for Israel during the Yom Kippur War of 1973 and the US economy from 1973 to 1974. A three-decade run of unending US economic dominance and prosperity was ended by the combination of higher unemployment and higher inflation, known as stagflation. However, this tale gives the impression that the Pax Americana was ended by a series of unfortunate events. In reality, in the 1970s, the government, the richest Americans, and the major corporations started diverting resources from supporting the working and middle classes in America.
The 1965-pushed-for-war on poverty and “Great Society” programs that President Lyndon B. Johnson supported were the turning points of the burgeoning neoconservative movement. They “knew that becoming politically militant was no way for poor people to lift themselves out of poverty,” according to late neoconservative movement co-founder Irving Kristol in his autobiographical memoir about the “curse” of the War on Poverty. All but denouncing Johnson’s policy wonks of being wealthy communist stooges for the Soviet Union, Kristall and his followers argued that the sociological motivations for idealistic affluent policymakers were that a “Great Society” could only emerge as a result of class struggle.
Neoconservatives viewed Johnson’s plan to end poverty and increase public spending as dangerous and communist. In the 1980s, President Ronald Reagan’s conservative revolution, which included the remnants of the Great Society, the War on Poverty, and even the social welfare system that he had created through the New Deal in the 1930s, were attacked and austerity-ridden.
Although Reagan claimed in his 1982 diary that “the press is dying to paint me as now trying to undo the New Deal,” I keep repeating that I have voted for F. D. R. four times. In the end, he expressed disdain for all social welfare and social mobility policies and said, “I’m trying to undo the “Great Society.” Reagan has argued for years that the New Deal’s policy planners who were working under Roosevelt “spoke admirably of how Mussolini had made the trains run on time.”
Reagan claimed at the 1985 Annual CPAC (Conservative Political Action Conference) dinner that the opposition party, particularly those of liberal persuasion, has dominated the political debate, but that in the end, “the other side is practically bankrupt of ideas.” He added that “the new conservatives made a new connection between economic justice and economic growth” and that it was necessary for them to “institute a fair tax system and turn the current one on its head.”
The new lower tax system for the wealthy and corporations came into being through corporate lobbyists and the fusion of various ideological viewpoints from both the Republican and Democratic parties, particularly in 1981.
In the 1950s and the 1970s, the richest people in the world once received a 70% income tax rate and a 91 percent of their income for every dollar over $200,000. Between 50% and 28% of the highest tax rates decreased during the Reagan administration. Under President Bill Clinton’s administration, the highest income tax rates increased by a small amount in the 1990s, but by then, investments in social welfare programs had fallen behind inflation for almost 20 years, and they would never fully recover due to welfare reform.
Corporate taxes are at an all-time low of 21 percent as of the Trump tax cuts in his first term in office. These policies have caused a significant shift in wealth between wealthy Americans and the powerful corporations of the middle-class, working-class, and impoverished Americans.
In 2020, Carter C. Price and Kathryn Edwards wrote a working paper for the RAND Corporation, estimating that the wealth transfer rate from the bottom 90 percent of Americans to the top 10 percent of wealth, due to tax cuts and social welfare austerity. Even worse, this transference had increased by 2% on average annually in the 2010s, before the COVID-19 pandemic.
In other areas of the economy, things have been bleak for regular Americans. Since 2009, the federal minimum wage has remained at $7.25 (the minimum wage also stagnated for eight years in the 1980s). Most Americans still suffer from living-wage jobs as a result of outsourcing and downsizing, with half of all Americans earning less than $50, 000 annually and a quarter of all employees earning less than $25,000.
The figure is actually 23.7 percent if you add unemployed people who can’t find work other than part-time or who earn a poverty wage (roughly $25, 000) to the list. In other words, nearly one out of every four Americans currently has no job, according to Eugene Ludwig, the former US comptroller of money, in Politico earlier this year. At least that is what former US President Joe Biden claimed about the best economy the country has seen in decades.
The US is now trading in a manner similar to that of the Great Depression. Except that the richest 10% of Americans have an even greater influence on consumer behavior in 2025 than the lowest 300 million Americans. If the majority of consumers are unable to make enough money to rent or purchase a home, take a vacation, or even pay for basic healthcare and food, then consumer capitalism cannot exist. However, wealthy Americans essentially had this in mind at the beginning, with support from both political parties. These days, any remaining American dream is merely a fantasy. Because carpet bombs have been used to bomb every avenue to the general prosperity of the middle class.
Source: Aljazeera
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