If President Reagan's proposal to cut federal salaries is accepted by Congress, it will be a rerun of 1932 -- when the government furloughed employes and cut their salaries because of the Depression.
The president plans to submit a budget calling for a 5 percent pay cut in October 1985 for rank-and-file civil servants.
Insiders say that Reagan may also ask that members of Congress, congressional staffers and government executives take a 10 percent pay cut at the same time. That could affect as many as 30,000 Capitol Hill employes and many top career and appointed officials.
Under the proposal, which will not be official until the budget is released, government employes would get a 3 1/2 percent raise next month, but would take a 5 percent pay cut the following year.
Many veteran Washington observers think the president is playing high-stakes poker. They believe the proposal is designed to shake up Congress and the federal establishment -- to soften them up for a federal pay freeze, not a cut.
But administration officials say the president is serious. They point out that the action is not without precedent. For example:
In July 1932, at the height of the Depression, most federal workers were furloughed for one month without pay.
In April 1933 they were given a 15 percent pay cut.
In February 1934, federal workers had 5 percent of their pay restored, and got back another 5 percent the following July.
By April 1935 employe salaries were back to their 1932 levels.
Government historians point out that the pay cuts were not as drastic as they seem because the country was in a period of deflation, when prices were falling and jobs were hard to come by. Although the rate of inflation has dropped in recent times, prices are not falling and many costs, such as health insurance, continue to rise steadily.
If it comes to pass, the 5 percent pay cut would cost government workers about $3.58 billion a year.
Officials say there are two ways the president can attempt to implement the cut. A bill could be introduced and hearings held on it. The Senate and House would have to approve the legislation.
The other as yet untried method would be for the president to use the Federal Pay Comparability Act. That law was designed to give employes catch-up-with-industry raises each October, but it gives the president wide leeway to adjust that raise.
It is possible -- and government lawyers are checking this one out -- that the president could recommend the pay decrease at that time. Unless the Senate and House rejected his plan, it would go into effect.
Either way, Congress will have much to say about whether federal workers -- and members of Congress -- take a pay cut.