WITH THE STOCK MARKET'S further lurch downward yesterday, the sense of urgency sharpens. There are only a few things that Washington can do to slow the slide, but they need to be done quickly and firmly. The first is to give the country a budget -- one that will prevent the deficit from rising over the next 12 months.

The White House seems to have nothing in mind beyond the $23 billion deficit reduction already required by the Gramm-Rudman-Hollings legislation. Several senators -- Robert Dole, the minority leader; Lloyd Bentsen, chairman of the Finance Committee; and Lawton Chiles, chairman of the Budget Committee -- have urged a greater effort. They are right. As Sen. Dole observed, the markets won't be much impressed if Congress and the president go no further than the reduction that the law will automatically enforce whether they come to agreement or not.

The deficit is crucial because heavy federal borrowing tends to push up interest rates, and the implications are inflationary. The drastic drop in the stock market has many causes, but underlying all of them was a slow rise in both interest rates and inflation -- and a sense, widespread among people in the markets, that the government intended to do nothing about either of them until after the next presidential election.

To hold the deficit at the present level will take reduction of about $35 billion. That's not a huge difference from the G-R-H reduction of $23 billion. But the larger cut will affect the atmosphere in which people make decisions about investing money. It will show that Washington recognizes the strains created by its deficits and that, despite the election campaign, the government means to keep governing.

One more thing: this country needs to do what it can to keep the exchange rates steady. Whether the dollar should remain at its present exchange rate or a different one is, no doubt, an interesting question -- for some other occasion. It would be truly reckless to allow the dollar to fall, deliberately, at a time when the stock market is dropping uncontrollably. When the dollar started to slide at the beginning of last week, other countries' central banks immediately joined forces to support it. But reports have been circulating in Europe that the Federal Reserve was doing little to help, and yesterday the dollar was falling again.

Political ideas change with circumstances. Among other losses of the past week, the idea of leaving important economic decisions to the markets has suffered a severe loss of appeal.