THE CONGRESSIONAL Budget Office has let the mangy cat out of the bag. Instead of behaving as the president and Congress earlier said it would, holding steady this year in the $140 billions, falling to the $130 billions next, the deficit will rise this year to $157 billion, and rise further to $176 billion in fiscal 1989.

The bad news is a combination of two things: the timorousness with which the two sides finally went at the deficit last winter, and a likely weakening of the economy. The main point of the CBO estimates is that the deficit reducers are running out of time. The problem is not so much with the political calendar as with the business cycle. Sooner or later, there will be a recession. The recession, even more than the premonitory weakening of the economy that CBO and most other forecasters now expect in the year ahead, will simultaneously increase the deficit and make the deficit impossible to fight, since fighting it would only weaken the economy further. The deficit and the dependence on foreign capital which it bespeaks will thus become institutionalized. That is the real problem.

The administration, in the budget it will submit later this month, won't recognize or take any precautions against the gloomy reality the CBO foresees. Its cheerier forecast will allow it to show the deficit declining to the relatively comfortable levels agreed to by the president and Congress last year. If that turns out not to happen -- if in fact the deficit moves up again instead of down -- well, this administration will be safely gone and someone else will have to do the salvaging.

Congress can't afford to be so blithe; it won't be gone. But it may not be up to the choice it now faces in this election year. That choice is to accept and act on the likely truth as told by its own advisers, or fall back on the pillow of puffery the administration is proffering, which even some people inside the administration will tell you privately they barely or don't believe.

If it does the former, Congress will either have to acknowledge the deficit is going up or find new cuts. Most people think it is likely instead to look the other way. To take that kind of knowing refuge is the ultimate degradation of the budget process. Whatever they gain won't begin to equal what they destroy.