Let's set the record straight on the economic picture of the elderly. The notion that the elderly are better off, in terms of poverty levels, than other segments of the population was introduced years ago by Martin Feldstein when he was chairman of Ronald Reagan's Council of Economic Advisers. A month later came the administration proposal to severely cut Medicare and trial balloons to cut Social Security. It was a self-serving disinformation campaign that The Post has embraced. But it does not tell the real story, and it pits generation against generation.

Some theorized then that this strategy deflected consideration of real domestic program needs by pitting groups against each other, thereby derailing a common interest in questioning how defense expenditures and tax cuts for the wealthy were robbing us of our ability to protect our young and our old. If so, it certainly has worked with The Post.

The Post's shorthand description of the elderly as being better off than children {"Cut Social Security, Too," editorial, May 22} is insultingly misleading for a number of reasons. It suggests that either children or their grandparents will have to exist in poverty for there to be an equitable distribution of government assistance -- in other words, that the elderly are taking food from their grandchildren's mouths. Of course we support nutrition, housing and education programs for the young, but must we achieve those goals by abandoning the aged?

The Post's definition ignores the facts that the largest single segment of the senior population lives just above the poverty line and that among adults seniors represent the poorest group. The poverty figures for the elderly assume that seniors have reduced nutritional requirements (they eat less so they require less money for food) and ignore the stark fact that seniors, on average, spend 18 percent of income on health care. That's not by choice. It's money spent to stay alive, to stay ambulatory and to remain free from pain.

If that is not enough senior pain, consider the fact that Medicare covers slightly less now in out-of-pocket health care expenses than in the days before it was enacted. Consider the fact that in the last 10 years seniors have lost the double exemption, seen Social Security taxed, weathered hundreds of billions of dollars in cuts to Medicare, suffered criminally inadequate enforcement of nursing home regulations -- and have watched the growing inaccurate perception that most seniors are playing golf at a resort in Florida.

LAWRENCE T. SMEDLEY Executive Director, National Council of Senior Citizens Washington