Economy Act - Enactment

Enactment

As Governor of New York, Franklin D. Roosevelt had campaigned for the Presidency, in part, on a pledge to balance the federal budget. On March 10, 1933, six days after his inauguration, Roosevelt submitted legislation to Congress which would cut $500 million ($8.181 billion in 2009 dollars) from the $3.6 billion federal budget by eliminating government agencies, reducing the pay of civilian and military federal workers (including members of Congress), and slashing veterans' benefits by 50 percent. Veterans benefits constituted a quarter of the federal budget at the time. The Act was written primarily by Lewis Douglas, Roosevelt's Director of the Budget, and Grenville Clark, a private attorney.

The Act faced stiff opposition in the Congress. On June 17, 1932, the Bonus Army (about 17,000 World War I veterans and 26,000 of their family members and affiliated groups) had established a Hooverville shanty town on the Anacostia Flats area of Washington, D.C. On July 28, the U.S. 12th Infantry Regiment commanded by General Douglas MacArthur and the 3rd Cavalry Regiment (supported by six tanks) commanded by Major George S. Patton attacked and set afire the Bonus Army's encampment, injuring hundreds and killing several veterans and civilians.

Congress was forced to flee the city for several days after outraged veterans ringed the United States Capitol. The political backlash caused by the attack on the Bonus Army led to the defeat of several members of Congress that fall. Many in Congress, remembering the incident, did not want to support the Economy Act. The House Democratic Caucus even refused to support the bill. Heavily opposed by liberal Democrats (92 of whom voted against it), the bill passed the House of Representatives only with heavy support of Republicans and conservative Democrats.

The bill easily passed the Senate only because the Senate Democratic Caucus had scheduled a vote on the popular Cullen-Harrison Act (to amend the Volstead Act to allow the manufacture and sale of beer and light wines) immediately after the vote on the Economy Act—allowing Senators to cast vote for one very unpopular bill and one very popular bill in quick succession.

The President signed the Economy Act into law on March 20, 1933.