Am I not allowed to have any other holidays during December? Has Christianity co-opted them all? Perhaps I like to celebrate a pagan Winter Solstice and I might want to wish to you a "Happy Holiday" rather than pushing it into your face that I'm a pagan? (if indeed that's what I am, you'll never really know). You could pretend you're hearing about Christmas when I say "holiday", while I could pretend I'm talking about the Solstice, and we could all just get along a little better by avoiding overt discussion of religion with strangers. Manners and a little pretense helps smooth out societies rough edges. If you want to tell me your religion in your greeting that's fine. But why should I then be forced to tell you mine? If you say Merry Christmas to me and I'm not a Christian, should I hypocritically invoke the name of Christ back to you (and how does that mesh with the commandment about not using God's name in vain?) Should I merely ignore your greeting, or perhaps tell you "go #*@! yourself" Seems to me that "Happy Holidays" is a polite and inoffensive rejoinder.
It has been said that I have a "right not to celebrate this holiday," with the implication that if I don't want to call it Christmas then I shouldn't celebrate at all. But December 25 is a federal, state and local holiday throughout the USA. I can't go to a government office to carry on normal business. If I am a business owner I will have to pay holiday pay to employees (or be thought of as "Scrooge"). Granted, I'm not forced to go to church or give gifts or have a tree in my house (although there are societal imperatives to do so, especially for the culturally christian sort-of-believers). However on December 25th, I do not have the right to carry on my normal business life, so Christians need to acknowledge that they are indeed forcing the non-Christians in the nation to "celebrate" the day. You shouldn't be surprised that non-Christians want to fill the government-mandated holiday with something that isn't about Christianity. Indeed, they've got a holiday with no religious duties - which would make most people happy (e.g. Labor Day). Despite not being interested in Christmas as religion, non-Christians may be planning a nice holiday reunion with their family, and they might be happy and looking forward to it. Why should you expect them to wish you a Merry Christmas rather than Happy Holiday? They don't know or care if you're Christian, but they do know that they're planning a happy holiday and would like to wish you one as well. Is that so terrible?
The more that Christians use the "in your face" approach to the holidays, the more likely it is that non-Christians will eventually challenge the constitutionality of having the Federal government officially recognize the sacred holiday of only one religion as a national holiday. It is amazing to me that people who have a really strict interpretation of the US Constitution as disallowing any regulation of firearms will then pass blithely over the clause about "establishment of religion" and what it means to have a federal law providing a religious holiday. You can't have it both ways - either you have Christmas where people are forced to celebrate Christ, in which case the holiday is an establishment of religion, or you have a national holiday that is secular - i.e. available to all no matter what religion - and people can make of what they will.
So can you just give it a rest? You've got a national holiday for your religion (not for your god, but for your religion). So let's stop trying to make people feel guilty about wishing each other a happy holiday. Saying "happy holidays" is not about political correctness - it is what I feel, and who the hell are you to tell me not to say it or why I say it? The new political correctness is trying to make people say "Christmas" when they aren't Christians.
The "Christmas with a capital C" movement is another piece of cultural arrogance that doesn't really fit Jesus' teachings. I have a hard time imagining Jesus saying something like "I don't care how you treat each other, but make sure you celebrate my birth with a capital C, because its appearances that count."