They sold out the next generation.

The idea that age brings wisdom suffered a severe setback last week. The nation's two most prominent and beloved septuagenarians decided together that they really could hang on to their illusions after all. President Reagan agreed to "accept" full cost-of-living adjustments for Social Security and military retirement, while Speaker O'Neill agreed to "accept" what amounts to full cost-of-living adjustments in defense spending. Such mutual accession is equivalent to having Reagan say to O'Neill: "Since I want more guns and you want more butter, and we both agree that we can't afford either right now, let's compromise and take both."

This outcome would be funny were it not so tragic. The more-guns-and-butter formula will cost at least $100 billion more than the bipartisan Gorton-Chiles program during 1986-88 alone, not counting the likely addition to deficits of another $50 billion from even more costly slower growth. That $150 billion will be added to the $2.2 trillion of 1988 federal debt that would have materialized even with a real deficit reduction program. Over a generation of 30 years, another $150 billion of debt will add $2.5 trillion to the interest burden on that debt, even if interest rates hold steady at 10 percent, which they will not do with an ever-rising ratio of federal debt to GNP. Over the near term, the 1986 deficit will exceed $200 billion if the curent 2 percent growth rate persists.

The saddest thing about the president's decision to abandon the responsible moderates from both parties in the Senate, who painstakingly assembled the Gorton-Chiles no-more- guns-or-butter package, is that it smacks of a cruel abandonment by the old of the interests of the young. O'Neill cherishes the extravagant Great Society promises that saw Social Security and military retirement benefits rise twice as fast as real wages. He chooses to ignore the fact that the over-65 population already has a per-capita income slightly above that of the working population, while its members are currently collecting benefits equal to three times their contributions to Social Security. He chooses to ignore that by the end of the century, those now carrying the pay-as- you-go burden of the Social Security program will receive less than they pay into Social Security. He also chooses to ignore that the Gorton-Chiles proposal would fully protect the low- income pensioners who would be pushed below the poverty line by a one-year freeze.

Reagan cherishes his first-term formula of big bucks for defense and supply-side snake oil for those who worry about deficits. He chooses to ignore that the past four years have provided us with what might have been a very useful experiment in fiscal policy. If you cut taxes to 19 percent of GNP and keep spending at 24 percent of GNP, will a strong economic recovery eliminate the 5 percent gap? Clearly, the answer is no.

Of course, if the economy could grow at 6 percent, the problem would go away by 1991, or at least it would have, had growth not been an average of 2 percent since last summer, exactly the average growth rate for the 1980s to date. That little deviation from plan has already put the supply-side magic farther into the realm of fantasy, but not, apparently, in the starry eyes of our president.

In his State of the Union message, Reagan touted tax reform as a way to release the pent- up energy of Americans. One hopes that he is right, because if we follow the president's instincts on budget policy, carrying the $3 trillion in debt we will accumulate by 1991 is going to take plenty of energy.

Of course, when you remember who will and who won't have to clean up the mess, maybe you have to admit that age does bring wisdom after all.