What signal does it send to the dozens of individuals who have gone before Independent Counsel Lawrence E. Walsh's grand jury under oath and facing possible criminal penalties if they don't tell the truth to see and hear President Ronald Reagan pouring forth misstatements and distortions on the Iran-contra affair without a word being raised to correct him?

In the president's latest version of these events, delivered during last Wednesday night's press conference, he resurrected the old tale about how the United States was not dealing with the Iranian government of the hated Ayatollah Khomeini, but with "some people not in the government of Iran . . . who wanted privately to meet with us on how there could be a better relationship if and when the day came that there was a new government in Iran." Yes, he admitted, we gave them arms, but that was "because we felt that maybe they could influence the Hezbollah {the pro-Iranian Lebanese extremist group that was holding Americans hostage}. We weren't dealing with the kidnappers at all. And this was what the whole situation was."

That particular fairy tale view has already been demolished by the president's own review board headed by former senator John Tower and the House-Senate Iran-contra committees. They presented evidence that the key Iranians involved were, in fact, representing the very top government officials and the entire scheme had probably been cleared by Khomeini. The arms? They went directly to either the Iranian Army or the Iranian Revolutionary Guards for use in the war against Iraq.

The president's newest fabrication, introduced Wednesday as he attempted to defend Vice President George Bush, revolved around the well publicized objections to the project that were raised in 1985 and 1986 by Secretary of State George Shultz and former defense secretary Caspar Weinberger. Shultz, according to his own testimony, opposed the arms sales to Iran from the start because they ran counter to U.S. public policy of trying to prevent all weapons shipments to Iran and because the trading of hostages would only encourage the taking of more hostages. "We are signaling to Iran that they can kidnap people for profit," Shultz told the Tower board.

Weinberger told the congressional committees that it was foolish to suppose there were any "moderates" in Iran with whom we could negotiate and that the idea of sending arms to that country was "absurd."

Wednesday night, however, Reagan tried to sell the idea there was only one type of objection, the concern being attributed to Bush that it could create a public relations problem if discovered. As Reagan put it, Shultz and Weinberger "did not object to the idea" of the arms sales. "They knew what we were trying to do," the president said, "their objection was that if and when this became known, as it would be, it would be made to appear that we were trading hostages for -- or arms for hostages."

Carrying this version even further, the president said, "It turned out that George and Cap and those who had doubts were right in that, when {the Iranian arms dealings for hostages} did become known by way of a henchman of the ayatollah, then everyone just automatically said, and to this day are saying, it was arms for hostages."

Wonderful. The serious policy concerns voiced at the time by the top two members of the president's own Cabinet violently opposed to the effort were in a few moments reduced by Reagan to the same superficial "reservation" recently voiced by a campaigning George Bush, who also declared himself as being "solidly" behind the initiative. I wonder if Bush has yet tried to explain to Reagan why he now sees it was arms for hostages?

But this should not be just a matter between Reagan and Bush. I wonder if Shultz called the president after Wednesday's press conference to correct Reagan's version of his objections. The secretary of state did make such a call in November 1986, when the president made some mistakes about the Iranian arms sales at another press conference. Did Weinberger call? What about Howard Baker? Did he take the president aside and explain what the records have shown and others have said under oath?

The president's rewriting of history to suit the occasion should not be left solely to him. Others have a responsibility to try to keep the record straight.

The writer is a member of The Post's national staff.