Joe Nocera claims that President Franklin D. Roosevelt’s “cutting spending” in 1937 made the Depression worse. It was not budget cuts but costly liberal court rulings that shrank the economy in that year.
In 1937, the Supreme Court upheld anti-business legislation that had been struck down by lower courts, like the National Labor Relations Act, in decisions like National Labor Relations Board v. Jones & Laughlin Steel Corporation . That made unions more powerful, led to a wave of costly strikes and discouraged hiring. The increased wages demanded by unions resulted in employers’ laying off many workers instead of modestly trimming wages.
If government spending alone could end a recession, then why did the Great Depression deepen under Herbert Hoover, who increased government spending to $4.7 billion from $3.1 billion?