Top tax rate raised to 79 percent. Germany becomes the second nation to recover fully from the Great Depression, through heavy deficit spending in preparation for war. The Supreme Court declares the National Labor Relations Board to be unconstitutional. Roosevelt seeks to enlarge and therefore liberalize the Supreme Court. This attempt not only fails, but outrages the public.
Economists attribute economic growth so far to heavy government spending that is somewhat deficit.
Roosevelt, however, fears an unbalanced budget and cuts spending for 1937. That summer, the nation plunges into another recession. Despite this, the yearly GNP rises 5.0 percent, and unemployment falls to 14.3 percent. Congress passes the Agricultural Adjustment Act of 1938 and the Fair Labor Standards Act. No major New Deal legislation is passed after this date, due to Roosevelt's weakened political power.