Brad DeLong is overreaching when he argues "A normal person would not argue that the New Deal [TC: parts of, or "on net"] prolonged the Great Depression." HedgeFundGuy, who may or may not be normal, responds:
A 2004 paper at the SSRN by Chari, Kehoe and McGratten argues that increased labor rigidity from the New Deal was primarily responsible for prolonging the Great Depression. Cole and Ohanian wrote a similar piece for the Minneapolis Fed in 1999.
Further, the 1937 recession was most probably due to a tax over-reach by anti-business Democrats. Unemployment rose from 5 million to almost 12 million in early 1938. Manufacturing output fell off by 40% from the 1937 peak; it was back to 1934 levels. What caused the plunge in taxes was the tax on retained earnings…
I had thought that bad monetary policy in 1937-8 (arguably not "the New Deal", though we tread close to semantics) was at fault more than fiscal policy; I have never studied that question in depth. The earlier attempted cartelization of the economy through NIRA and NRA didn’t help either. Deposit insurance, and a move toward automatic stabilizers for aggregate demand, stand on the more positive side of the ledger.
I disagree with much of Gene Smiley’s book on the Great Depression, but he has many more reasonable arguments about the negative economic consequences of the New Deal and their connection to the magnitude and length of the Great Depression. I do not know if he is normal.