Answer: With the economy doing better, Roosevelt decided to cut back on federal spending in order to reduce the rising deficit, but miscalculated. While he reduced spending, the Federal Reserve Board raised interest rates, making it more difficult for businesses to expand and for consumers to borrow to buy new goods. So, the economy was in another tailspin and unemployment soared. Largely because of this downturn, the Democrats suffered a setback in the 1936 elections. Although the Democrats still maintained a majority in both houses of Congress, Roosevelt's power base was seriously weakened because many Southern Democrats were only lukewarm supporters of the New Deal.
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