On the contrary, I think the thing that has deceived us about how much poorer we've become is cheap stuff. TVs are cheaper than ever. We spend less as a percentage of income on food than we've ever done in the past. Even automobiles and computers are more affordable than they've ever been. To a superficial viewpoint, we have more purchasing power than we've ever had (and the CPI includes many of these items which give that superficial viewpoint).

But we see the true regression in purchasing power once we look at things that haven't benefitted from lowered manufacturing costs. Housing, education, health care and the like are showing the true nature of the situation of how poor we've become.

P.S. Yes, I know I took the quote out of context and I'm more agreeing with you than disagreeing with you. But there is a distinction to be made that it's not all stuff that's more expensive, just the important stuff.

http://www.usgovernmentspending.com/total_spending_chart

That more than explains the lower amount left for people.