PRESIDENT BUSH now suggests he may not propose a cut in the capital gains tax again next year. That would be doubly good news. The gains cut is a bad idea in its own right: It would give lots of money the government doesn't have to people who don't need it, with little return to the society at large. More important, the president would be setting Congress a good fiscal example.

A gains cut would be proposed in part as a relief measure in the face of recession. But the deficit reduction agreement the White House reached this year with Congress sets up a zero-sum game. The deficit is expected to continue to increase for the next year or two because of the soft economy (which reduces government revenues while adding to certain costs) plus the passing costs of the savings and loan bailout and Operation Desert Shield. The agreement allows for these, but says there shall be no further increases by virtue of action by the president or Congress.

For the next few years the rules say that if they want to make one program more generous they must make another less so. But the president has said he does not want to propose an offsetting tax increase to finance a gains cut. Nor do he or his advisers, who are already having to struggle to keep next year's spending within next year's boundaries, seem to have a major offsetting spending cut in mind.

The alternative would be to claim, as the Treasury has in the past, that a gains cut would pay for itself in the increased economic activity it would generate. But that would be an invitation to Congress to return to precisely the fanciful estimating that the new accord is meant to end. The gains proposal would also be an invitation to the Democrats to join in a bidding war to pump up the economy. That's in neither the president's interest nor the economy's. It cost him enough to win the budget agreement that we would hope he would want to defend the budget agreement rather than be a party to undermining it.

Budget director Richard Darman has said that the new budget rules, if they are adhered to, will have the useful side effect of forcing both parties to be clearer than in the past about their priorities, since they will generally be able to enlarge one program only by reducing another. He is said to have suggested, as one such possibility, cutting some benefits to the better-off elderly and using the proceeds for relief of the poor and/or the middle class.

The carving-out of such a fairness dividend would be fine. But neither party should shift to the side of stimulating the economy, which would mean breaking the budget agreement. The Congressional Budget Office has recently conservatively estimated that in each of the next two fiscal years the deficit will exceed $250 billion. Surely that's economic stimulus enough. The president should hold the line, not take the lead in crossing it.