The GI Bill transformed the American middle class, but its effects are dwindling

In the aftermath of World War II, conservative lawmakers wanted to reward those returning from battle — avoiding a repeat of the anger and violence that followed World War I — but of course they wanted to do it on the cheap. They had no idea that they were about to write the greatest piece of social engineering of the last 80 years, putting any subsequent liberal effort to shame.

After World War I, Congress awarded veterans a bonus that (who says today’s Congress has a monopoly on stupidity) would not be redeemable for another 26 years. In the depth of the Depression, 43,000 former soldiers and their families marched on Washington demanding their money immediately. In a clash with police, two veterans died.

It was an admittedly bad look, and lawmakers wanted to avoid a repeat, but they also wanted to prevent President Franklin Roosevelt, who died before the war's end, from taking the lead for fear he would implement some other crazy New Deal program, like school lunch or Social Security.

The result was the GI Bill, which gave White veterans access to housing and higher education.

Very simply, this access to a house and better wages that came with education created wealth for a class of people who never would have had it otherwise. And because there were literally millions of veterans, the effect on American society and economics was profound, so much so that its effects are felt to this day.

As families paid off their starter homes they built equity, sold them at a profit and moved to larger ones. Their incomes swelled, and in the 1950s and 1960s they were saving at a rate three times the rate of the generation that followed. Having lived through the Depression, they managed their money carefully.

When we think of the American Dream, it’s often associated with the “pursuit of happiness” ideal expressed by the nation’s founders. But the term American Dream wasn’t coined until 1931, and even then it was less about materialism — James Truslow Adams’ ultimate incarnation of the American Dream was the Library of Congress.

Sadly, the phrase “A man’s library is his castle” did not catch on, and the American Dream became synonymous with homeownership. This is right and wrong. While houses aren't exactly what Adams and Thomas Jefferson had in mind, they are something of a delivery system that affords us the luxury of dreaming.

This wealth, as wealth does, gave the World War II generation opportunities and flexibility that prior to the GI Bill did not exist. They could draw down on their savings or borrow against their home equity to put their kids through college or for a down payment on their children’s own homes.

Many a person who bristles at government handouts was actually able to buy a house, go to school or start a business on what was, essentially, the federal dime.

But we did no follow-up work. Instead of investing more in our people, we got lazy and even looked the other way as institutions like nursing homes and hedge funds figured out how to tap into this wave of middle class wealth.

White wealth, naturally. For all intents and purposes, Black people were not included in the federal largesse. Writers of the GI Bill artfully stacked the deck so banks could refuse to loan to Black families, and colleges could refuse to admit Black veterans.

This, incidentally, is an example of what is meant by Critical Race Theory. CRT is not accusing us of being a nation of Archie Bunkers, it is noting and studying the ways that our nation has evolved to preclude equality.

The evidence of this is in the numbers: White Americans are more than three times as likely than Black Americans to be left an inheritance from their parents. Only in rare cases are these inheritances the product of generational wealth — having a great grandparent with the name of Vanderbilt or Whitney. Mostly, it was the accumulation of the financial advantages obtained through the GI Bill.

Yet these inheritances are dwindling. Sniffing money anywhere it can be sniffed, private equity firms have entered the nursing-care business where the law allows them to bleed families dry while, according to the National Bureau of Economic Research, leading to “higher patient mortality rates, fewer caregivers, higher management fees and a decline in patient mobility.”

Coldly put, after a family’s assets have been confiscated, the patient is no longer of use and there is a financial incentive to provide poor care and free up another bed for the next victim.

Eighty years ago even conservative lawmakers were writing policy that transformed the lives of millions of Americans. Today, they can scarcely keep the lights on. RIP GI Bill. It was a good run.

Tim Roland is a Herald-Mail columnist.

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This article originally appeared on The Herald-Mail: GI Bill made middle-class America, but its success has consequences