27 years of economic pain for most Americans
If one could put a price tag on pain, look no further than the lack of economic progress for most American families since 1989.
In that year, Ronald Reagan left the White House after two terms of his “trickle-down” economics, and a new era of democratization was heralded as the Berlin Wall fell. Since then, U.S. GDP has more than tripled, while the S&P 500 has surged more than sixfold.
Yet most Americans haven’t reaped the benefits from those expansions, as the middle class treads water and the poorest get more deeply mired in debt, according to a new report from the Congressional Budget Office that was prepared for Senator Bernie Sanders (I-Vermont). The report puts real dollars behind the economic pain currently reflected in the discontent many Americans are voicing as the November presidential election nears.
But while so many are losing out, the rich have grown only richer, the report finds.
“The reality, as this report makes clear, is that since the 1980s there has been an enormous transfer of wealth from the middle class and the poor to the wealthiest people in this country,” Sanders said in a statement. “There is something profoundly wrong when the rich keep getting richer and virtually everyone else gets poorer. That is unacceptable, and that has got to change.”
While total wealth in the U.S. doubled between 1989 to 2013, only the richest Americans saw their fortunes rise, the CBO found. Families in the top 10 percent of the wealth distribution control about three-quarters of all family wealth, while those in the 51st to 90th percentile own 23 percent. The bottom half of the distribution has just 1 percent of the country’s wealth.
What may be even more eye-opening is how wealth has changed for rich and poor families since 1989. Those in the 90th percentile now enjoy 54 percent more wealth than they did in 1989. Those at the median have just 4 percent more wealth than in 1989, while the poorest have 6 percent less.
On a dollar basis, the richest families have average wealth of about $4 million. The poorest now have debts that far outweigh their assets: The bottom 25 percentile is saddled with debts of $13,000, compared with $1,000 in 1989.
It’s no coincidence that supporters of Republican candidate Donald Trump are pessimistic about the future, given that many of them are in the demographics that have lost ground since 1989. About 8 out of 10 registered voters who support Trump say life for people like them has gotten worse during the past 50 years, according to a new Pew Research Center poll.
Trump supporters tend to be men who lack college degrees, a group that has been on the losing end of the economy. The CBO report backs that up. It found that Americans without college degrees have suffered since 1989.
“Families headed by someone with a bachelor’s or graduate degree had higher median wealth in 2013 than their counterparts did in 1989; that was not true for families headed by someone with less education,” the report noted.
Middle-aged and young Americans have lost ground. Only families that are headed by someone over the age of 65 are better off than they were in 1989, the report noted. Student debt, a problem that Sanders has focused on, is playing a role in the declining fortunes of poor Americans, the CBO noted.
The share of families in the bottom 25th percentile with student debt rose from 25 percent in 2007 to 36 percent in 2013, while their student debt load jumped from $24,000 to $36,000. At the same time, credit card debt remained steady, while fewer poor Americans carried credit-card charges, the report found. Nevertheless, earning a college degree remains key to higher wealth.
The CBO noted: “Median wealth of families headed by someone with a college degree -- $202,000 -- was almost four times the median wealth of families headed by someone with a high school diploma.”