THE GREATEST distraction the president proposed in his State of the Union address may have been his idea of turning $15 billion a year in current aid to state and local governments into a bowl of revenue sharing. The device is familiar, and this year even frothier than usual, in that the president won't specify the programs he wants merged out of existence; instead he will submit a longer list from which a Democratic Congress, which resists these steps just as traditionally as Republican presidents propose them, will be invited to choose.

Mr. Bush says his reorganization of the programs would return power to the people; that's just what presidents Nixon and Reagan said theirs would do. The rhetoric calls for shifting both money and control from the federal to the presumably more virtuous state and local levels, where, by Republican lights, the funds will be better spent. But often the supposed reverence for state and local government has translated into no more than a cut in federal support; proposals to combine federal programs have been a cover for killing them without ever quite saying so.

Federal aid to state and local governments declined by something like a third in the Reagan years. It was the part of the federal budget that was cut the most; from about a fourth of state and local budgets, it fell toward perhaps a sixth. It is still about $150 billion a year, but much of that is aid to individuals -- Medicaid, welfare -- that the states merely match and transmit. To put $15 billion of the remainder into a single pot would be to make a major change in the pattern of aid, but without affecting need or addressing the serious questions in the relationship. If states and cities are hurting as much as appears, should federal aid go up or down, and which functions of government should the aid be for?

Where current programs can't be justified -- don't work or don't fulfill an important enough federal purpose -- they should be killed and the savings applied somewhere else. That's what the president's budget director said he hoped the spending caps and pay-as-you-go rules in last year's budget agreement would finally and usefully force both elected branches to do -- be more exact as to their priorities and choose more explicitly among the claims on the dollar. Here the administration proposes instead to create a formless program that represents neither an increase in federal commitment nor a reduction in state and local responsibility. This is one they should have left in the budget museum.