Catsup as a vegetable.

It went down as one of the great public relations debacles of the Reagan administration's first year. Satirists and politicians seized on the Agriculture Department's school lunch regulations as a symbol of how the Reagan budget cuts would hurt the little people of America. Network cameras rolled as Democratic senators gleefully munched a meager meal of a few french fries, catsup, a tiny hamburger on a piece of bread, and half a glass of milk.

The administration even went so far as to say in its recent report card that withdrawing the regulations was one of its major achievements--neglecting to mention that it had been responsible for them in the first place.

It was assumed, as President Reagan put it, that "somebody got overambitious in the bureaucracy." But the brouhaha was actually triggered by a departmental lawyer's apparently innocent addition of a few words--about pickle relish--designed to clarify the regulations. And, in the rush to get the rules out in 90 days, no one anticipated the impact of the image of school kids getting catsup instead of green beans, officials said.

The rules were pulled back in the resulting furor and now, nearly five months after Congress ordered USDA to make cuts in the school lunch program, the department is still struggling to get the regulations out.

This time the administration is taking no chances. A Cabinet-level council is considering options for reissuing the rules, designed to attack plate waste, reduce portions and credit dishes such as tofu and yogurt for basic food groups.

The saga of the catsup regulations actually began when a group of federal and state food service directors and nutritionists gathered last July to examine the school lunch program's existing "meal pattern" regulations.

The department called the sessions, said G. William Hoagland, then head of the Food and Nutrition Service, because of the president's general directive to review regulations and because Congress wanted Agriculture to cut costs in the school lunch program, without sacrificing nutritional value.

Item No. 24 on the task force's agenda was "accept catsup as a fruit/vegetable when used as an ingredient." Agriculture officials said many suggestions for changes had come in from food service people around the country, but no one seems to recall now who suggested Item 24.

When catsup came up for discussion, it wasn't envisioned for credit as an ingredient, but as a substitute for a vegetable, according to Lynn Parker, a nutritionist who attended the session representing the Food Research Action Council.

She said she and others voiced their concerns about counting catsup as a vegetable, arguing it contained too much sugar and didn't give children the right idea of a nutritious vegetable.

Mary Filko, a food service coordinator from Akron, Ohio, spoke in favor of the idea. She noted that students in her district slopped catsup all over their hamburgers and french fries. It cost a lot of money and should be credited as a vegetable, she said.

The majority of the task force agreed, but in the group's final report to Hoagland on July 21, the matter was not addressed directly. That flexibility was to be left to state officials.

Hoagland, who lost his job and responsibility for the program in mid-November after simply telling Congress the new options were at the White House, said the rush to get the rules out for the new fiscal year meant that the department didn't do "all the careful checks we normally would have done." That included a careful review by officials at the Office of Management and Budget, who are happy to be able to say that because the rules went through on an "emergency" basis, they didn't scrutinize them carefully.

One of the people who did look at the regulations was Jim Hinchman, of the department general counsel's office, which reviews the legal basis for the regulations. The rule writers had said that schools, for example, "could not credit as a bread a food that is not enriched or whole-grain." Hinchman apparently decided it would be helpful to provide a "positive example," officials said, and so he wrote that a state "could credit a condiment such as pickle relish as a vegetable." No mention was made of catsup, except by association.

Hinchman declined to discuss "the department's internal decision-making process."

Virginia Wilkening, a GS13 who has been at the department for 10 years and worked on the regulations, said the reference to relish didn't attract attention even after Hinchman added the fateful words.

Page 47 of the department's food-buying guide, the bible of the school lunch industry, clearly states that condiments can't be credited toward the vegetable/fruit requirements, she said. "We didn't think many states would use it the catsup option ," Wilkening recalled. "We thought it was insignificant. Obviously it wasn't."

Hoagland is still at Agriculture, as an assistant to Secretary John R. Block, and he is philosophical about the furor that resulted. The president was riding high just before Labor Day, with victories in Congress on budget cuts and the tax bill, he recalled. "People were looking for ways to embarrass him," Hoagland said.

He was prepared for controversy over the proposal to reduce the portion size of the meals. He was blindsided by the furor over catsup. "In hindsight, if it had been brought to my attention that I was going to get clobbered and lose my job--take some heat--over it, I would have counseled against it," Hoagland said.

An early draft of the department's new option paper to the White House still recommended reducing portion sizes but added, "The crediting issue of condiments would be eliminated." The favored option, it was noted, would save money and give states new flexibility "while exposing the administration to minimal criticism. Significant support for this proposal can be arranged prior to its announcement."

Even if a White House decision is imminent, a new version of the catsup regulations won't be final for months and any changes won't be in place until next fall, officials said.

Akron's Filko said she missed all the television hoopla over the catsup regulations, but still feels the crediting change is warranted. "I think we ought to consider all foods with nutritional value," she said.

The idea, she added, isn't to replace green beans with catsup, but to be practical and give children a choice of something they'll eat. "I'm not a nutritionist. I'm a home economist," she said. "I'm also concerned about getting food into a child . . . . If catsup helps get kids to eat, I can't complain. I don't like my hamburgers plain either."