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Why do we celebrate Presidents' Day?

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State Laws vary, but either to honor Washington's and Lincoln's birthdays or the honor all past presidents, depending on what state you are in.

Interestingly, the only Federal Holiday is still called "Washington's Birthday."

Washington's birthday on February 22 had been a federal holiday for many years. Lincoln's birthday was February 12 and some states later began celebrating Lincoln's birthday.

In 1968 there was an attempt in Congress to merge Lincoln's and Washington's birthdays into a single federal holiday and to call it Presidents' Day, but that proposal was never actually passed.

The federal holiday remained (and remains) Washington's Birthday; however, several states passed their own state holidays to either honor both Washington and Lincoln or all past presidents. Some of those states call this state holiday Presidents' Day (various spellings).
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