Volume 42, Number 14 · September 21, 1995
The End of Affluence
By Jeff Madrick
The last time Americans were strongly in favor of balancing the federal budget was during the Great Depression. Then, as now, the public generally thought that budget deficits were the cause rather than the result of their economic problems, and few politicians, including Franklin D. Roosevelt, disagreed or dared to contradict them. In his 1932 presidential campaign, Roosevelt criticized Herbert Hoover for not reducing federal deficits, and when the economy began to recover later in his first term, partly because of his own spending programs, he decided to deal firmly with the government's growing deficit. By 1936, the deficit had risen to more than 5 percent of the gross national product, compared to less than 3 percent today. But FDR's sharp cuts in government spending in 1937 did not have the effects he had hoped for; instead they contributed to a sudden, fierce recession later that year which reduced tax revenues and thwarted any attempts to balance the budget.
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