OVER THE course of almost two decades, the nation added steadily to its stock of government services and protections. As a result, life became more agreeable, or at least more tolerable for many people. As the volume of activities grew, however, and the taxes needed to support mounted, so did the feeling among taxpayers that too much was being spent on things they would rather not buy.

The process of dismantling this vast social network has now begun, and the nation will be going through an interesting if painful period. As the budget cuts trickle down to communities, neighborhoods and families -- and as more cuts are studied and proposed -- each government program and regulation is being put on the auction block. What did this particular service or rule accomplish? How much was it really worth?

Some values were easily established. The nation let the president know in no uncertain terms that it places a high value on basic Social Security benefits and is willing to pay for it. Other such tests are now being run at the state level.

Virginia, for example, tried out a Medicaid cutback plan last month. The plan -- intended in part to offset lost federal aid but mostly to save state money -- would have forced several hundred aged and disabled persons from nursing homes. That didn't sell well, so now the state is floating a plan to stop aid to needy people hospitalized for more than 12 days and to blind and disabled children. The returns on the new plan aren't in yet.

Judging public reaction to most cuts won't be that easy. Federal money flows through many community agencies -- from libraries and day care centers to dog pounds -- and its effects are diffuse. For example, a Wall Street Journal article last week reported that welfare cuts in Hartford, Conn., have been associated with increasing child abuse, domestic violence, abandonment of children to foster homes and a good bit of plain old dispair.

The administration has not shown much interest in following up on the results of its budget policy. Most domestic research and evaluation has been cut sharply -- including some important data series. That's too bad because without continuing surveys and controlled studies it will be difficult to filter out the effects of budget cuts from the frequently similar effects of high and rising unemployment. It will also be hard to gauge the impact of an improving economy when it comes.

Careful reporting of local happenings and reactions can, however, be a very useful guide for assessing the worth of government programs. When all the budget cutting is done, it is not likely that the nation would choose to reconstruct the entire edifice of federal aid exactly as it was before. There was simply too much duplication of effort, too much waste, too little attention to local needs and too much red tape. But it is likely that some lost benefits will be judged worth paying for and that better ways of providing them will be found. For that reason, the auctioning off of government programs should be watched closely and continuously.