THE LARGE increases in aid to the poor that were included in the budget agreement between the president and Congress were put there partly in disguise. They were offered up not in the name of the poor, which makes Americans uneasy, but mainly in the name of children, who just happen to be the poorest group in the country. The pattern was set in the 1988 presidential campaign.

The Democrats were supporting a major child care bill providing for grants to, and regulatory structures within, the states. The Bush campaign responded by proposing a new children's tax credit that it said would accomplish the same objectives with a lighter hand. That proposal turned out to be an extension by another name of the earned-income tax credit, an obscure but radical device that serves as a selective negative income tax in supplementing the wages of the working poor with children.

Other Republicans were proposing an expanded earned-income credit as an alternative to the increased minimum wage that Democrats were also pushing. The Democrats liked the idea of expanding the credit as well. A major increase has now been sent to the president in the deficit reduction bill under the banner of child care, satisfying everyone. A leaner but still substantial version of the original child care bill has also been included, which the president, after earlier resisting, will accept. The funding will be subject to the annual appropriations process. The same is true of what became a companion proposal to expand Head Start; the two may in fact compete for funds in what for the next several years will be a limited pool. The government has nonetheless made two important new commitments.

In the campaign the Democrats also urged that all but the smallest employers be required to provide health insurance as a way of reducing the share of the population -- about a seventh -- that is uninsured. The president countered by suggesting vaguely that Medicaid be used as an umbrella instead. That program now covers fewer than half the poor, but even in the Reagan era Congress was expanding it by requiring the states, which share the cost, to extend coverage to all poor children under a certain age. The new legislation would take that in stages to all poor children regardless of age, a major advance. It also includes a new tax credit to help the working poor with children buy private health insurance.

A proposed expansion of the food stamp program, second-largest federal welfare program after Medicaid, was killed in deficit reduction, but Congress separately passed new housing legislation that could lead to a resumption of the federal effort in that field. In the 101st Congress not all the poor, but the working poor with children, did pretty well.