Bureaucrats cringe at Reagan 'diet' plan

When Ronald Reagan said he wanted to "put Washington on a diet," thousands of federal employees knew the President had his eye on their source of groceries. Not only has Mr. Reagan imposed a federal hiring freeze, but he is pushing for a major restraint on government employee pay-and-benefit increases. He also wants to reduce cost-of-living increases for federal retirees and change the way pay scales are figured for all employees as well as special government construction and service projects.

An official of the 750,000-member American Federation of Government Employees (AFGE) -- who described federal employees as a relatively conservative, "flag in the lapel" group, many of whom supported Reagan for president -- says federal workers are "beginning to get excited and frightened." The AFGE plans to have an emergency leadership conference in May, and there is talk in some quarters of work stoppages if Congress goes along with the President.

By freezing federal hiring and reducing payroll projections from what President Carter had intended, Reagan hopes to reduce nonmilitary employees by more than 160,000 below the 2.1 million currently projected for 1986. This includes some increases in civilian defense-related job, but would mean budget savings of $400 million this year, $1.9 billion in 1982, and more in the years beyond.

Reversing a campaign pledge, President Reagan no longer favors the semiannual cost-of-living boost for federal retirees but wants the adjustment made just once a year.

The administration also will ask Congress to change "comparability" standards for government workers. Under current law, pay scales are supposed to be in line with the private sector. Arguing that federal employees' benefits (such things as retirement and leave) exceed those of private jobholders, Reagan wants to set the comparability standard at 94 percent of average nonfederal compensation. Such a move would save $30 billion over the next five years, the administration figures.

The federal employees' union argues that because it is not allowed to negotiate pay and benefits with the government, comparability ought to be kept at 100 percent of the private sector. A similar revised pay bill was introduced on Capitol Hill last year, but did not pass.

"We defeated it last year, and I think there's a chance we can do it again," said Jane McMichael, AFGE legislative director.

Regarding the proposed cutbacks in numbers of federal employees, she adds, "The only thing we can do is try and fight the [budget] cuts. . . . But I don't know that we'll be any more successful than anyone else."

Even if the comparability standard is not changed, federal employees are resigned to pay raises well below the inflation rate. President Carter held them to about 9 percent last year, well below a comparability figure of 14 percent. Carter had planned on a 5.5 percent raise for 1981, but Reagan wants to cut this to 4.8 percent.

There also will be likely changes in the way the Davis-Bacon and Service Contract acts are administered. The acts set government project construction wages at the prevailing local private industry rate. But a recent Carter administration study concluded --Department administration of the laws has been inflationary and could be reduced by 10 percent. Labor Secretary Raymond Donovan has tol Congress he will make such changes.

One of the biggest political battles may center on holding federal retirees to annual cost-of-living (COLA) pension boosts, which Jimmy Carter wanted as well. But given the parsimonious mood in Washington these days, the best pension recipients may be able to hope for is compromise legislation proposed by Sen. Ted Stevens (R) of Alaska.

This would keep semiannual COLA adjustments for retirees over age 65. Those between 60 and 65 would get one inflation raise a year (the same as social security recipients), and for those younger than 60 the raise would amount to half of th e inflation rate.