THIS YEAR as last, the president's budget will include a relatively modest, highly targeted tax cut, administration officials say. The principal purpose is political. The proposal lets Democrats say that they, too, support a tax cut, just not an unaffordable or poorly constructed one.

The Republicans can be expected to resist the proposal, because they want either a larger, less targeted cut or the issue in the campaign. But if they are the ones to say no, it will help to neutralize the issue--and were they to confound expectations by saying yes instead, the proposal is narrow enough that it wouldn't be a disaster. The president's neutralizing tactic is the same one the Republicans are trying to use against the Democrats minimum wage and managed care regulation--endorse a weak proposal that lets them nonetheless claim to be for a strong result.

But on taxes the political cleverness has a cost, in that it concedes the worthiness of the goal. We wish in this case the president were less concessional. Even his proposal would cost between a fourth and a third of a trillion dollars over the next 10 years. The White House says the projected surplus in other than Social Security funds will be sufficient to cover most of the cost. But that surplus doesn't exist.

For the surplus to materialize, the politicians would have to vote deeper cuts in most domestic spending programs than either party is prepared to support. The loss of revenue would make it harder to solve the long-term Social Security and Medicare financing problems to whose solution both parties claim to be dedicated. It would make it harder to finance defense and the rest of government as well.

Mr. Clinton would limit the loss, and the money would be used to increase retirement savings for middle- and lower-income people, help defray health insurance costs and--the president's aides say--possibly benefit the poor in a way not yet determined. Those are worthy purposes. They beat giving an indiscriminate and untethered tax cut mainly to high-income people who don't need it. But fiscally, the president feeds the notion that the government can afford a tax cut whose effect would be to squeeze other governmental undertakings that he simultaneously is pledged to support. We understand the politics, but he no more than the Republicans can have this one both ways.