Since recovery seemed under way, the lip service that Roosevelt had been paying to the notion of balancing the budget became a policy issue, and after the 1936 election his treasury secretary Henry Morgenthau sought a return to orthodoxy. This led to a round of monetary tightening, which came on the heels of a fiscal contraction that was a result of new social security taxes kicking in. This increased unemployment, causing a short but sharp recession in 1937 and into 1938. This recession, a perfect natural experiment in austerity policy since the contraction was deliberate, expenditure focused, and happened in an upswing, failed miserably and shifted the balance of power from budget balancers to advocates of spending.

Mark Blyth, Austerity, loc. 510