Reagan's Revolution and Wealth Concentration

Reagan's Revolution

  • Key aspects of Reagan's Revolution:
    • "Peace through strength"
    • The "War on Drugs"
    • "Reagan Democrats" and the politics of backlash

Richest of Rich Gain $1 Trillion

  • Wealth Growth:
    • The wealthiest Americans experienced significant wealth growth, with the top 19 households gaining $1 trillion in 2024 alone.
    • This amount exceeds the value of Switzerland's entire economy.
  • Concentration of Wealth:
    • The share of total U.S. household wealth held by the top 0.00001% of Americans (11 households in 1982, 19 households in 2023) increased from 0.1% in 1982 to 1.2% in 2023.
    • By the end of 2024, this share jumped to 1.8%, equivalent to about $2.6 trillion, marking the largest one-year increase on record.
  • Total U.S. Household Wealth:
    • Total U.S. household wealth was approximately $148 trillion at the end of 2024, calculated by subtracting the value of big-ticket items and unfunded pensions from the Federal Reserve's estimate.
  • Wealth Growth Disparity:
    • While the average net worth of all groups has increased since 1990 due to U.S. economic growth, the wealth of the richest Americans has grown at a much faster rate.
  • Factors Contributing to Wealth Growth:
    • The surging stock market in 2024 significantly boosted wealth creation at the top, following substantial gains in the previous year.
    • The S&P 500 had its best consecutive years in a quarter century.
  • Superbillionaires:
    • Individuals in the top 0.00001% are worth at least $45 billion per household and include figures like Elon Musk, Jeff Bezos, Mark Zuckerberg, Bill Gates, Warren Buffett, and Stephen Schwarzman.
  • Growth in Billionaire Numbers:
    • The U.S. has seen a rise in the number of billionaires, with estimates from JP-Morgan Chase's private bank indicating nearly 2,000 billionaires in 2024, up from about 1,400 in 2021.
    • Wealth-data firm Altrata estimates 1,050 billionaires in 2023, up from 975 in 2021.
  • Wealth Distribution:
    • The wealthiest 1% of households own about 31% of the nation's wealth.
    • The wealthiest 10% of households combine for about 67% of total wealth.
    • The wealthiest 50% of households own about 97% of total wealth.
    • The bottom 50% of households account for about 3% of total wealth.

Trump Rejects Millionaires Tax Hike

  • President Trump opposed raising tax rates on the highest-income Americans.
  • He dismissed a potential millionaires' tax as "very disruptive."
  • This stance countered discussions among Republicans about increasing the marginal income-tax rate on incomes over $1 million, which was considered as part of a tax-and-spending bill.
  • The idea of raising taxes on the rich was floated to counter Democrats' claims that Republicans were cutting Medicaid while lowering taxes for the wealthiest Americans.

Peace Through Strength

  • The collapse of the Soviet Union is often attributed to Reagan’s “hawkish” stance.
  • An institutional perspective provides a broader analysis:
    • History of military expansion tied to protecting domestic economic interests.
    • Continuation/expansion of U.S. military involvement abroad.
    • Heavy investment in domestic military infrastructure, which:
      • Fueled growth in the Sunbelt and Mountain West since World War II.
      • Benefited both Democratic and Republican administrations.
      • Involved public spending with private enterprise support.
    • The military budget increased by 40% between 1980 and 1987, with Congressional approval.
      • Democrats complied, fearing being labeled as “weak” on defense.
      • Emergence of the “Bechtel Cabinet”.
    • Intervention in Cold War “proxy wars” (e.g., Nicaragua, El Salvador).
      • Often defied Congressional restrictions (including the Boland Amendment).
      • Collaboration with private business interests.
      • Executive Branch secretly and illegally overruled Congress to fund right-wing governments and insurgencies.
      • Led to the “Iran-Contra” affair and the Tower Commission report.
    • Factors that contributed to the Soviet Union’s collapse included:
      • Gorbachev’s reform efforts and outreach to Reagan.
      • Eastern European dissent and protest organizations.

The "Bechtel Cabinet"

  • Key Projects:
    • Hoover Dam
    • Liberty Ships (WWII)
    • CANOL pipeline
    • Dresden Generating Station
  • Key Figures:
    • George Shultz
    • Caspar Weinberger
    • W. Kenneth Davis
  • William Greider quoted Bechtel “uses government to secure new contracts and subsidies, to open new markets and to win protection against risks.”

The "War on Drugs"

  • The 1980s version was portrayed as a moral campaign and “tough on crime” effort, reviving Nixon’s campaign.
  • It was connected to public policy and entrenched, geographically concentrated poverty.
  • Public policy since the 1960s favored policing over treatment.
    • JFK’s “Committee on Juvenile Delinquency and Youth Crime, 1961” linked crime with minority communities.
    • Policy supported police training, research, and criminal justice reforms.
    • Military-grade weapons were introduced to police departments for “riot prevention”.
    • Johnson’s support of the “Safe Streets Act” in 1968 gave federal funds and control of anti-poverty programs to state and local authorities.
  • By the 1970s, federal policy required partnerships between employment initiatives, grassroots organizations, schools, public housing, juvenile courts, and police for federal funding.
  • Federally funded crime control programs effectively