THERE IS A lesson for budget-cutters in the story of Mattie Dudley, well told by James J. Kilpatrick on the opposite page today. It is this: there are important social values bound up in how a society runs its welfare programs, and these aren't always measured in the bottom line of a budget sheet.

Miss Dudley has been caught in one of those "welfare traps" that have proliferated in the welfare laws in the last few years. Her trouble comes from the fact that she is too much like other people--and not enough like that stereotypical wastrel whose image has guided recent developments in welfare law. Mattie Dudley wants to be productive, so, despite having been crippled from birth, she sells newspapers on the street. She knows she'll never be well-off in this life, but she thought she might at least provide herself with a decent burial.

The government, of course, could have none of that. Welfare recipients aren't supposed to have aspirations or dignity, and they are certainly not to be encouraged to accumulate any assets beyond the minimum needed for daily survival. So the welfare office threatened to take away her modest welfare grant unless she got rid of the $1,000 certificate guaranteeing her a funeral. When she gave the certificate to a friend, they got her on another technicality added to the welfare law in the budget process a year and a half ago. Because she disposed of an asset for less than fair market value, her Medicaid was cut off.

There are many such traps now built into welfare law--rules that reinforce dependency and destroy people's self-respect. The rule that we noted last week, for example, that now keeps poor youngsters from holding summer jobs lest their mothers lose all welfare aid. And the provisions that now make welfare families considerably worse off if they try to achieve independence by working.

Laws like these are corrosive in their effects on families and individuals. When they come to light in real cases, like Mattie Dudley's, they arouse the general sense of outrage. But somehow those feelings don't come forward in the cold, hard calculations of the budget process that now dominates all congressional consideration. So we'll make another argument more suitable to the times. Destroying peoples' sense of dignity and achievement doesn't save money for the taxpayer, it simply ensures that the problems of dependency will be with us for a long time to come.

There are provisions in the House Ways and Means Committee budget reconciliation bill--in conference with the Senate this week--that would dismantle some of these welfare traps. They're too late to help Mattie Dudley, but they could prevent more cases like hers in the future.