THE PRESIDENT is scheduled to decide today whether to sign the Housing and Community Development Act. By itself, the legislation is useful and needed. But an amendment attached to it promises to open the way for considerable human anguish and economic loss. This is the amendment backed by Sen. Thomas Eagleton (D-Mo.) and Rep. Gene Taylor (R-Mo.) that would allow federally insured banks and sawings and loan associations to finance homes and businesses in flood-plain areas where the communities concerned are not participating in the national flood-insurance program. We think the amendment is unsound, and that to defeat it a veto of the entire legislation is called for.

Sen. Eagleton has tried to depict the issue in simple terms of big government v. local communities. When he discusses the effects of federal land-use codes on such small towns as Cassville, Mo., and Wooster, Ohio, he says "these communities are tired of dictation from Washington by bureaucrats who know nothing about their local situation and care even less." And they may well be; the "anti-Washington" tide is undoubtedly running strong. But there is no evidence that these local communities are tired of receiving Washington's disaster relief - after the flooding. As Sen. William Proxmire (D-Wis.) noted in floor debate last June, "Experience has shown that owners of property will build in flood-prone areas - we all know it. It happens in every state - lenders will make loans in areas that are flood prone, and people will buy in areas that are flood prone. And when the flood disaster occurs, the federal taxpayers will pick up the tab out of compassion."

The tab is worth thinking about. The current flood-insurance program, however much bureaucracy has hampered it in some areas, is intended to spare 90 per cent of the population from having to underwrite the 10 per cent that wants to risk having in the flood plains. Several months ago, the director of the Office of Management and Budget, in saying that the "administration is strongly opposed" to the amendment, noted that "subsidies [created by the amendment] would total billions of dollars over the next 20 years." More important is the threat to human life from what OMB called "the uncontrolled new development in flood areas."

The President should veto this attempt to gut the flood-insurance program and ask Congress to send him the housing bill again without the Eagleton-Taylor amendment. There is time left in the current session to do this. In May, the President issued a thoughtful and balanced executive order on flood-plain management, a document that is contrary to the spirit of the Eagleton-Taylor amendment. A veto would confirm that Mr. Carter stands not only behind his own words but also withe the communities that need protection from floods.