All my searches come up with nothing relevant, and I cannot find a detailed outline of the United States budget during the Great Depression. I realize that unemployment rates were high since the Wall Street Crash of 1929, but did the United States government lay off people in the military? I am trying to figure out if the United States Government lay off people in the United States military if the Great Depression struck again or the government decided to cut a significant portion of its defense spending.
Warren G Harding won the 1920 presidential election by promising a "Return to Normalcy". He continued the deep cut backs in the US Army budget that was begun by Woodrow Wilson in 1919. The ensuing Cooledge and Hoover administrations continued to keep the US Army budget rather small. So did FDR, up to 1940. Between 1920 and 1939, the US Army was rather stable in size, with only 125,000 regular army troops and an additional 125,000 National Guard, part-time soldiers. In 1939, the United States Army was only the 19th largest army in the world. Bulgaria had a bigger army in 1939. The United States did not expand the US Army when the Great Depression hit. During his first term, FDR even tried to cut it down to an even smaller size, which led to a major row with US Army Chief of Staff, Douglas MacArthur in 1933. FDR did back down, because of the enormous unemployment rates in the US. The three previous Republican presidents had already made it very small. It was remarkably stable in size between 1920 and 1940.
Source: "A Country Made by War" by Geoffrey Perret