AMINOR PROVISION in the two telephone books that Congress enacted last week to reduce the deficit seeks to extract $250 million from the guaranteed student loan program this year. It could be the metaphor for the entire budget process. A meat ax was swung to achieve a fake budget cut. Great effort was spent to give members a way of claiming they had saved the money while denying they had cut the aid. In the long run the budget will be no leaner, and, in a triumph of theater over substance, a program that needs to be reformed has been poked with a stick instead.

The administration and Congress have been fighting over the student loan program for seven years. The early fuel was ideological -- an effort by the administration to turn back the act of 1978 by which the program was greatly expanded to include the middle class and made into a near-entitlement. In this the administration was wrong, but in the other half of the argument, over the loose mechanics of the program, it has often been right. The default rate is the best barometer of this. The program now costs more than $3 billion a year, but only half of that is available for interest subsidies; the rest goes to make good on defaults.

So the program needs work, but that has to be patiently done. Because most of the cost in any one year is for loans agreed to years before, it is hard to squeeze money out of the program either fast or painlessly. But that is what Congress wanted to do, and so it turned to the system's reserves.

The way the system works, banks make the loans and the federal government guarantees them. But for various reasons -- a sense of federalism, a desire to spread the risks -- the drafters decided the states should also have a part as intermediaries. When a student defaults, the bank seeks reimbursement from the state, the state from the federal government.

To help the states set up the necessary agencies, the government gave them seed money and the right to collect insurance premiums from students. They also earn interest on their accumulated funds. A couple of years ago, in the name of deficit reduction, Congress began taking back the seed money. Now it wants to spoon up some of the premium and interest money as well.

The states are protesting. They say the money's theirs, and anyway, it's spoken for. Either they've promised their banks to keep certain sums in reserve, or floated bonds to supplement the federal aid and made similar promises to the bondholders, or let the reserves be used to undergird local secondary markets. They claim they can't keep operating if they have to give the money up.

Enough of this is true -- some is just bleating -- that leading members of Congress acknowledge they'll have to return to the issue early next year. So you see how it has all turned out. Instead of restructuring the program, Congress milks it, and then doesn't do a very good job even of that. That's what happens when there is no resolve, and a whole year is reduced in the final days of Congress to just two bills