"Obama happened, that's what."
I would date the end of the dream to September 11th, 2001. That is the date everything changed.
The current Regime is just taking advantage of past events and molding current domestic events to advance their ideology. That is damage enough to the dream in itself.
Luckily, bureaucracy in the U.S.A. has never been as efficient as in Europe or other parts of the world (after all, Europe and Asia have had thousands of years to perfect madarinism). No matter how much the administrative state squeezes out of us, it can never back the same amount of govering power. Bureaucrats are simply too lazy, too stupid, or too busy chasing the latest politically correct trends.