Chronologically, the Reagan Administration may mark a turning point but the main substance of the economic damage to the middle class occurred under subsequent administrations, both Republican and Democrat. Actually, I still look back with favor upon most of what Ronald Reagan did.
What has happened is bigger than any single President. It is the rise not of socialism, of which there is no significant evidence, but of corporatism -- a corruption of free market capitalism. Perhaps the chief virtue of limited government is that it has little to offer to wealthy special interests -- it is limited to that which benefits all citizens more or less equally. Government has, indeed, become too big and, even more importantly, too unrestricted in its scope.
Who has benefited? Taking the home mortgage crisis as an example, it may seem at first blush that under-qualified mortgage seekers benefited from the government's interventions in the market, from FHA to Fannie Mae and much in between, but where are they now? Who, meanwhile, has walked away with billions, not mere millions, from the bubble built with Collateralized Mortgage Obligations and credit default swaps -- instruments ordinary citizens never heard of before post-crash media reports? Who has suffered the damage to their pension funds and IRA accounts and the value of their homes?
This was NOT entirely an accident. The financial elite knew that whatever setbacks their strategies might suffer they would have protection. Understanding risk, after all, is basic to their professions. What hedging and insuring they provided for themselves would be further fortified by their networking connections and their "too big to fail" status virtually guaranteeing government bailouts. For them, the profit and loss market system had become the fabulous profit and merely huge profit rigged market system while the little people, middle class homeowners and taxpayers, bore risks they never even knew about.
Because of the government aid extended to under-qualified home buyers, popular even with the middle class at the time, "Socialism", (taken broadly to mean any government market intervention), is taking the rap in the prevailing propaganda with those buyers now paying the price of government meddling with foreclosers and payments they can no longer afford.
But beneath a layer of obscuring technicalities, the main damage to the wider economy, including very responsible home owners who never overextended themselves, was the work of the corporatists in the big banks and other financial institutions and the politicians bought with corporatist money. It was they who tore away the sensible post-New Deal regulations that would have contained the problem.