THE ARMY has a great idea but it is thinking too small. Sensing a squeeze ahead that could threaten its weapons-buying and other modernization programs, it is proposing to "privatize" a major budget item. It would turn to the nation's investment banking houses to finance a $400 million model light-infantry base, complete with accompanying town for 29,000, on 300 acres of Fort Drum in upstate New York.

The privatization plan would change appearance more than reality. The Pentagon already turns to private contractors to help build such projects; it pays them as they do the work. The Treasury then borrows in the money markets -- that is, from the private sector -- to cover the costs. In the years in which construction payments are made, a project shows up in the budget in the form of additions to military spending, the deficit and the national debt. As the borrowed funds are repaid, the project shows up in the form of added interest costs.

The privatized plan would be different mainly in accountancy and timing. Instead of having the construction costs all charged to it up front, the Army would be able to spread them over the life of a mortgage, just as people do the cost of homes. In later years this device would leave fewer dollars for other projects, but in the years just ahead -- the ones the Army is worrying about just now -- it would leave more.

An exciting new world opens up. The M1 tank is also a drag on the budget. The Army could issue tank bonds, set up an adopt-a-tank program. You help buy a tank and they put your name on a plaque on the side, the way churches and schools do with windows and water fountains. Even better, the Army could go to Congress for authority to lease your tank. The Navy already leases cargo ships. You could set up a tank shelter, cut your taxes, buy the Army a tank and make the defense budget look smaller, all in one stroke. What Grinch could be against that?

The Office of Management and Budget, for one. Will it endorse the Fort Drum idea? Outgoing OMB director David Stockman has always been quick to denounce such practices as buying in low and taking items off budget on grounds they mask true federal costs. His point has been that people in government ought not to be allowed to evade hard choices with easy accounting. Exactly so.