THE CHILD care bill could be an unlikely indirect beneficiary of the budget standoff. A couple of weeks ago Bob Dole was suggesting that child care, a particular goal of the Democrats, be stripped from the budget agreement in return for also stripping out the president's capital gains tax cut, which the Democrats opposed.

Both were dropped, though the child care bill was kept alive as a separate entity. That was okay. The child care bill is fine. The gains cut would not have been. Now the idea would be somehow to reconnect the child care bill (which comes with its own source of finance, an extension of the expiring telephone excise tax) as a way of picking up needed Democratic votes. That would be the best of all possible combinations, good social and fiscal policy both.

The child care bill has two main parts. The first would give tax cuts or refunds to low-income working families with children; for different combinations of reasons, the administration and Democrats both favor this. The second would mainly be a system of grants to lower-income families to buy child care. This the Democrats like, and the administration (on the shaky basis that it would give the government too large a role in child-rearing issues) does not.

Democrats voted against the budget agreement on grounds it was regressive. The child care tax provisions could help cure that without increasing the deficit (but still would not exact retribution from the highest-income beneficiaries of the Reagan-era tax cuts, the Democrats' main goal). The grant program, whose maximum size has already been reduced in conference, would meanwhile be subject to the appropriations process, which the budget agreement has also limited. At least in the early years, there wouldn't be that much program to oppose -- and who wants to veto a child care bill in an election year, anyway?

A major question still to be settled in conference is what kind of tax cuts to give. House Democrats favor a large increase in the earned-income tax credit. The Senate bill instead made the current dependent care tax credit refundable (meaning that payments would be made to those with too little income to owe taxes; only taxpayers are helped now). The Senate would also provide a credit against the cost of health insurance premiums. The expanded EITC is the best of these ideas, the refundable child care credit, second-best. The health care credit should await another time.

The bill should also bar federal payments to sectarian child care centers -- but it won't. Neither house, nor the administration, wants to take this on -- nor do the supporters of child care, who know better, want to burden their bill. They'll leave the separation of church and state to the courts, which can then (if they decide as they should) be indignantly denounced for judicial activism, which is to say, for accepting the responsibility the elected branches deliberately shoved off on them.