Aid the cities until . . .

The Reagan administration is currently doing some quick backpedaling from a controversial draft report on US urban policy prepared by the Department of Housing and Urban Development.

The administration is wise in seeking to disengage itself from the report which the White House says President Reagan has not read. The report argues that federal aid has contributed to the decline of American cities and therefore that many grant programs now in place should be eliminated. Such a sweeping withdrawal of financial support would add up to a major shift in policy by the federal government - before there has been a chance to replace it with any version of a ''new federalism'' program.

The draft report not surprisingly drew the wrath of many mayors at the 50th annual meeting of the US Conference of Mayors in Minneapolis this week. The report, after all, argued that two decades of generous federal financial support to cities has transformed local officials ''from bold leaders of self-reliant cities to wily stalkers of federal funds.'' The majority of the nation's mayors, it might also be noted, are Democrats who have expressed reservations about the administration's planned ''new federalism'' program that would turn most federal social programs back to state and local governments.

The mayors clearly have reason for concern.

Many cities - large urban centers and smaller communities - are facing sharp cutbacks in services because of the recession and prior budget reductions.

Elminating or sharply curtailing federal monies for such various programs as transportation, road repairs, sewers, and water supplies would only exacerbate current economic problems.

At the same time, there is something to be said for the report's conclusion that in the long run cities must rely more heavily on families, neighborhoods, businesses, and associations, rather than just turning to the federal government for help.

''Greater self-reliance,'' the report argues, is essential to the ''good health of cities.''

In calling for a new federalism, the Reagan administration has invited serious public rethinking about the entire relationship between the federal government, states, and municipalities. Surely, it cannot be denied that Washington over the years has gradually taken over many governmental functions and services most efficiently left at the state and local levels. When and if the US were eventually to move toward such a new federal approach, then there would be a strong case for ending or limiting the dependency of so many cities on Washington. Until such time, however, any deep federal cutbacks in aid would do far more damage than good.

The administration, in disavowing the new urban report, appears to recognize just such a situation.

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