President Vetos Bonus Bill Benefiting Soldiers

Posted on April 29, 2011
By John W. Dean

Following the war’s close in 1918, there had developed a widespread feeling that a bonus of some nature should be granted to the ex-servicemen. By the time the matter reached the front burners in Congress in 1921, thirty-eight states had agreed to grant bonuses, with many of the states amending their constitutions to do SO.18 Washington was under great political pressure to provide an additional bonus, and rising unemployment had exacerbated the situation. The Senate proposed to pay a bonus of $1.25 per day for each day of overseas service during the war ($1.00 for domestic service) with payments to be in quarterly installments, or converted to life insurance at the option of each soldier. Sponsors of the federal bonus were not sure how much it would cost the Treasury, but low estimates were in the billions. Not only would such a bonus preclude Harding from enacting a tax cut; it added to rather than reduced the national debt that had grown excessively during the war, and which Harding was determined to pay down.

On July 6, 1921, and after consultation with Harding, Secretary of the Treasury Mellon sent a letter to the Senate to dissuade senators from acting on the bonus bill. During a lunch the next day with old friends at the Senate, Harding learned that the bonus bill was about to pass. He advised his former colleagues that it was too expensive, and he felt so strongly that he was going to return to the White House to prepare a message on the matter to the Senate. Congressional relations staff did not yet exist in the White House to lobby for a president, so Harding selected the most forceful lobbying technique available-direct intervention by the president.

 

Six days later, on July 12, Harding returned to the Senate to personally deliver his message and to spend his own political capital to block the bonus bill. Shortly after two 0′clock he was escorted to the vice president’s desk, where he was introduced and received with a standing ovation before launching directly into the problem. The president explained that “there has come to my attention the pending unfinished business before the Senate, and it is an imperative duty to convey to you the probable effect of the passage at this time of the proposed act providing for adjusted compensation to our service men in the World War.” Pulling no punches, he told the Senate that if such action was taken, it would be a “disaster to the Nation’s finances” plus it would preclude cutting taxes. Harding gave a surprisingly stern lecture on the nation’s finances and the lack of money to pay for such a bonus. He explained what was already being done by a grateful nation for its veterans and it was extensive: compensation and insurance claims numbering 813,442 were pending with half a billion dollars already paid out for such claims; 107,824 men were then enrolled in vocational training or rehabilitation programs for disabled soldiers, which cost $65 million annually; and an estimated additional half billion would be needed before the program ended. When the president said he understood the desire to do something for veterans, no one doubted his sincerity. But they were not pleased to be told they should not “break down our Treasury, from which so much is later on to be expected, “The president closed with a request that the Senate get back to work on the matters for which he had called the special session.!”

Reaction to Harding’s personal lobbying was strong. No sooner was the president out of the Senate chamber than progressive Republicans and Democrats went after him for his gumption in coming to the Senate to kill legislation. The partisan debate quickly degenerated. Senators Borah and La Follette were incensed by Harding’s action. The remarks of Senator Pat Harrison, a Mississippi Democrat, reflects the attitude of the critics: “It is peculiarly strange, though, it would seem to me, that while in the cases of President Wilson coming to Congress it was in the interest of world peace, world humanity, the enfranchisement of the women of the country, for the ship purchase bill, and other constructive legislation, yet the only time the present President has come before the Senate has been in an obstructive way, and he has attacked the soldiers of America who fought and won the recent war.”20 But the critics were in the minority. The press applauded Harding’s going to the Senate, noting his “outstanding courage,” “intelligence,” and “patriotism .” The New York Times said Harding had shown himself “President of the whole people, not an opportunist politician,” and joined in endorsing the president’s request that the Senate put aside the bonus bill.21The president’s efforts were successful. The Senate followed his advice and sent the bonus bill back to committee. But it was not dead, only resting.

Harding’s July 12, 1921, message did nudge the Senate to take action on the tax legislation, although they did not get it resolved until September, when Senator Boies Penrose, who had been diagnosed with terminal cancer, made the tax bill his last great cause. Penrose, who had been Mellon’s principal sponsor for the cabinet, was able to guide the House tax bill through the Senate Finance Committee and, while it ran into stiff opposition from farm-bloc senators and Democrats, it passed. The differences with the House version were ironed out before the close of the special session for the president’s signature. This completed the priority items Harding had requested that Congress deal with but certainly did not solve all the problems or resolve the bonus bill.

During the next session, in 1922, the House again passed a soldiers’ bonus with a decisive vote of 333 to 70. The House bill made no provision for funding the bonus, thus it was a budget breaker requiring payment from the Treasury. It was, once again, precisely the type of deficit spending Harding and his secretary of the Treasury had earlier opposed. The president informed the Senate that if they passed the bill, he would veto it. Harding’s announced veto resulted in heavy lobbying of the White House first by the Senate, and then by the heavy guns of the American Legion. But they could not change Harding’s mind. The Senate passed the bonus bill by a vote of 36 to 17, a tally that showed that many senators wanted to avoid being on the record for more deficit spending, and also that they did not want to be on the record opposing the politically popular bonus in an election year.

Conventional wisdom expected Harding to cave and reluctantly sign the bonus measure. On September 19, 1922, he surprised many by vetoing the bill only six weeks before the election. Expressing his sympathy for the plight of veterans, he declared that it was simply unfair to add to the national debt for fewer than 5 million veterans at the expense of 110 million Americans; “whether inspired by grateful sentiment or political expediency,” it would undermine the confidence on which the nation’s credit was built and “establish the precedent of distributing public funds whenever the proposal and numbers affected make it seem politically appealing to do SO.”22 The House overrode the veto. But the Senate sustained it. It was a bold stand by the president in an election year, and it hurt him politically in the short term. He did not live long enough to fully appreciate the significance of his position, which helped to usher in the booming economy of the roaring twenties.

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Excerpted from Warren G. Harding: The American Presidents Series: The 29th President, 1921-1923 by John W. Dean.

Copyright © 2004 by John W. Dean.

Reprinted with permission from the publisher.


JOHN W. DEAN served as Richard Nixon’s White House counsel for a thousand days. He is the author of two books recounting his days in the Nixon administration, Blind Ambition and Lost Honor, as well as Unmasking Deep Throat, and Warren G. Harding. A native of Marion, Ohio, he lives in Beverly Hills, California.

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