THE ADMINISTRATION is pressuring Israel to drop the Lavi, the advanced fighter plane that country has been building with U.S. funds. It's a hard decision for the Israelis. A lot of jobs depend on the plane, and as ever in such matters, a fair amount of prestige has been invested in it as well. But the administration is right to intervene, and the divided Israeli Cabinet, which continues to put off a decision on the question, should heed the good advice.

No one disputes that the Israelis need new fighters, nor that the Lavi, which they have carefully designed for their own needs as well as for possible export, would likely be a good one. But comparable fighters are said to be currently available from U.S. manufacturers for less. The problem with the Lavi, as the State Department said in an unusually blunt statement the other day, is that neither government can afford it.

Israel now receives about $3 billion a year in official American aid. A sixth of that goes to the Lavi. That cost would rise sharply as the plane went into production. If Israel were to pay, it would be forced either to increase its defense budget or to unbalance it by cutting other items. Neither course is palatable, nor probably wise.

But the United States can't pay, either. The foreign aid program has already been bent out of shape by a combination of budgetary pressures and politics. The total has been held down even as the amount for Israel and the linked amount for Egypt have been allowed to rise. Other recipients and projects have been badly squeezed. The Lavi could only make this bad situation worse.

The Lavi is not said to be vital to Israel's security. The arguments for it have to do much more with the country's economy, with creating not just jobs but a sharper technological edge and another way of earning needed foreign exchange. But a costly fighter plane is the wrong way to go about this. This is a defense expenditure that would drain the two countries more than it would strengthen the