On February 22, 1832, Congress first discussed honoring President Washington's memory, but it wasn't until 1885 that Washington's birthday became the fifth ever federally approved bank holiday. In 1968, while Congress was working to pass the Uniform Monday Holiday Act to give Americans more three-day weekends, Land of Lincoln Representative, Robert McClory (R-IL), lobbied (unsuccessfully) to have the name changed to Presidents' Day. While the federal holiday remains to be called Washington's Birthday, it became widely referred to by the public as Presidents' Day in the mid-1980s after years of advertisers working hard to turn it into another large retail holiday.
The American flag should be proudly flown at full-staff on Washington's birthday. This is a federal holiday.