Fun Fiscal Policy Fact

Table: Real growth rates of GDP, government expenditures, and federal tax receipts (year-end).

The conventional wisdom is that the Hoover administration cut federal spending and increased its tax revenues. Looking at the data, the conventional wisdom is wrong. Except in 1932 when real government expenditures fell 3.3 percent; after this the Roosevelt administration came in and spending again fell at 3.3 percent in 1933.

Although there were budget surpluses in 1930 and 1931, after this the deficits began.

I surmise the Keynesian response was that this was not enough. Nevertheless, the burden of the Great Depression arose from the gross incompetence of the Federal Reserve.