WHEN UPTON Sinclair wrote his novel "The Jungle" he meant it more as a socialist manifesto than a scathing indictment of the meat-packing industry.

"It seemed that he was working in the room where the men prepared the beef for canning, and the beef had lain in vats full of chemicals, and men with great forks speared it out and dumped it into trucks to be taken to the cooking room. When they had speared out all they could reach, they emptied the vat on the floor, and then with shovels scraped up the balance and dumped it into the truck. This floor was filthy, yet they set Antanas with his mop slopping the 'pickle' into a hole that connected with a sink, where it was caught and used over again forever; and if that were not enough, there was a trap in the pipe, where all the scraps of meat and odds and ends of refuse were caught, and every few days it was the old man's task to clean these out, and shovel their contents into one of the trucks with the rest of the meat!"

Sinclair's failure was the public's success. Outcry against "The Jungle" caused the Federal Meat Inspection Act to be drafted in 1906. This law requires that U.S. Department of Agriculture inspectors check the processing procedures each day of every meat packaging plant in the country, thus ensuring disease-free, unadulterated meat products packed under proper (sanitary) conditions.

The USDA, budget-cutting sword in hand, is seeking to slice through stringent inspection requirements to save the government what one critic calls "peanuts" over the next seven years. The USDA prefers to visit many of the plants less often, thereby requiring fewer inspectors and saving the department perhaps $2 million this year and up to $25 million in the years to come.

Don Houston, administrator of the Food Safety and Inspection Service, called the proposal an attempt to "modernize the system." He insists that the department is moving not just to save money but to piggyback on the efforts of plants with equipment sophisticated enough to do their own inspecting. He says the proposal will create an inspection system that is not only more efficient but more effective as well.

Right now, every meat-processing plant is inspected every day. The larger plants have "resident" federal inspectors who stay at that plant all day, although they might move from room to room. Smaller plants, though visited daily, do not have inspectors on the premises at all times.

To pass inspection, a processed meat product must be: 1) wholesome, i.e. put together according to USDA regulations (A hot dog, then, must have the proper proportion of fat to meat); 2) properly labeled, ensuring that something labeled "all beef hot dogs" does not contain ground chicken or soy product; 3) labeled so that the weight is accurately stated; and 4) prepared under sanitary conditions.

The new proposal suggests holding some plants responsible themselves for compliance with these rules, allowing for less-constant monitoring by the USDA.

The trouble with the proposal, says Tom Smith, research director for the Community Nutrition Institute, a consumer advocacy agency, is that "we are not getting any assurances of greater consumer protection."

Houston insists that since World War II, technology and innovation have led to efficient processing plants. These plants risk their reputations (and potential existence) if their products are inconsistent or adulterated. McDonald's, in theory, needs no prodding from the secretary of agriculture to keep hamburgers clean. All it needs, some people allege, is one whisper about adulterated meat and the golden arches begin to crumble. The Food Safety and Inspection Service is counting on the profit-motivated compliance by such companies to play by USDA rules.

The secretary of agriculture would decide who is inspected and how often after determining the nature of the plant's processing procedures, the adequacy and reliability of the plant's self-monitoring system and the plant's history of compliance with traditional inspection requirements. That is, if the plant just puts labels on hot dogs, it is considered a relatively low-risk operation and might not get inspected as frequently as a plant that cans beef stew.

Similarly, if the beef stew canner runs an exemplary processing plant where you can eat off the floor and the commitment for compliance is strong, the USDA probably wouldn't visit it much either. If the company sets standards for itself that surpass any devised by the USDA, inspectors might be more effective at less-reputable packers.

So far, so good, but critics say there is one aspect of the proposal with which they take issue. It would also allow the secretary of agriculture "complete discretion" in deciding when meat inspection is necessary and when it's not.

"Once they build discretion into the law they can go anywhere with it," said Smith. "Discretion" gives the secretary freedom to decide for himself which plants will be inspected and which will not. Proposal critics say that political whimsy could influence his decision.

"The political appointees call the shots. The shots are being called by OMB these days. They have ultimate authority on these issues," Smith insists, adding, "The thing that concerns me most is that they're doing it for budgetary reasons."

For 10 years the USDA has been pushing for quality control within plants, and Houston alleges that the new proposal will capitalize on these efforts. What he fails to mention, says Smith, is that severe penalties were always meant to accompany the processors' new responsibility of self-inspection. The new administration breathes no word of increased penalty.

Smith quotes a 1977 General Accounting Office report which states: "In-plant quality control systems must be accompanied by new enforcement tools. Economic deterrents were considered the most effective means to insure compliance. The report from a consulting firm recommended that the service Meat & Poultry Inspection Service devise a plant rating system tied to a progressive enforcement system that includes economic penalities."

"We have a good system of protection," says Smith, "and you don't trade it away, getting nothing in return. They can make this thing good by asking for authority to impose civil penalities," and eliminating the secretary's freedom. Give the plants responsibility for self-regulation, but come down hard on them if they fail to comply.

"Meat inspection is there for a reason," says Smith, referring to days before "pure food" legislation, when "we got all kinds of flotsam and jetsam" in processed meats.

"Economic incentive continues to exist for misbranding and adulterating of products," Smith said, adding that the "meat business is notorious for its problems of mislabeling and adulteration."

Houston denies that budget cuts inspired the proposal, which was searching for a sponsor when it went to the Hill on Monday. To be accepted, it must go through committee hearings in the Senate and House. If it survives the hearings, specific regulations will come from "rule-making procedure," during which the USDA will solicit public comment.