Congress passed the Economy Act in March 1933 as part of President Franklin D. Roosevelt’s New Deal. The act was designed to reduce government spending in three ways. First, it reorganized government agencies to improve efficiency and reduce costs. Second, it cut government employees’ salaries by as much as 15 percent. Third, the legislation decreased veterans’ pensions, particularly the pensions of veterans who had disabilities not caused by their military service. Roosevelt hoped that the Economy Act would save $500 million, which could be used to help fund other New Deal programs. The president also wanted to demonstrate to the American people that the government was economizing during the Great Depression. In March 1934 Congress responded to pressure from critics of the New Deal by passing the Independent Offices Appropriations Act over the president’s veto. The act restored the spending cuts made by the Economy Act and marked the first defeat for Roosevelt’s New Deal.
