Republicans have always paid lip service to the idea that federal budget deficits are inflationary. But what's this new tune the Reagan team is whistling? Deficits are okay, they say, just so long as the Federal Reserve keeps the money supply in check.

Really? Does this mean you can shuck your worries about a growing federal debt?

Not if you're a small business owner. Even if the Reagan Administration achieves its basic economic objectives -- slower monetary growth, lower spending, lower tax rates, and reduced regulation -- an unbalanced federal budget will be bad news for small companies.

The federal deficit during this fiscal year is expected to approach $55 billion. The deficits in fiscal years '82 and '83 will depend upon how much of the Reagan economic program Congress finally adopts, but the Administration itself has projected a $45-billion shortfall next year. It could be higher. In any case, the Federal Reserve has just two options, and the first one is clearly inflationary.

The Fed could, as it has done in the past, monetize portions of the debt, which amounts to printing money. The Fed buys government securities held by banks, thus increasing the banks' cash reserves. The banks use the reserves to create loans, leading to a multiple expansion of the country's money supply. All this would boost inflation, and interest rates would rise along with expectations of still more inflation.You could then expect the Fed to respond with a set of tight money policies similar to those imposed twice in the last two years. If you have any doubt about the effect of tight money on interest rates and on the small business sector, check the increases in bankruptcy filings that followed the Fed's moves in October 1979 and March 1980.

Of course the deficit doesn't have to be monetized. By not making offsetting debt purchases from banks, the Fed can force the government to compete for credit with private borrowers. Who do you think will come off best in that competition?

As conservative economists correctly reminded earlier Democratic administrations, the government will always crowd private borrowers out of a tight credit market. Big companies can still raise capital by issuing stock. Or they can tap the Eurodollar market, insurance companies, trust and pension funds, or commercial credit instruments. Small companies will still have to go to the bank, where interest rates will probably be setting new record highs and where adequate credit supplies probably will not be available at any price.

For small companies, therefore, there is but one basic difference between the two policies. Credit supplies will dry up more quickly if the Fed does not monetize the federal deficit. If it does, they'll still dry up, but not as soon. In either case, the economic effects of the Administration's supply-side policies will be swamped by the size of the federal budget deficit.

The problem could be avoided without dramatically altering Reagan's economic plan. Since cuts in the personal income tax rate are less effective in stimulating additional output than are accelerated depreciation or other business tax cuts, the first cuts in personal tax rates should be delayed at least until January 1982. Then the 30% reduction should be spread over five years instead of three. This gradual approach to cutting personal taxes would still generate the incentives to work harder and save more, but it would avoid the problems associated with large budget deficits. In addition, Congress would be under pressure to continue to reduce the size and spending burden of government.

How quickly and how throughly supply-side adjustments operate depends upon the competitiveness of the economy. The more dynamic the small business seactor, the more rapidly innovations and productivity increases will spread throughout the economy.Small and rapidly growing businesses, however, benefit most from adequate supplies of capital and credit and a rapidly growing, noninflationary, free-market economy. That is why balancing the budget is still as important as reducing regulation, slowing monetary growth, cutting taxes that restrain entrepreneurial activity, and cutting the level of government expenditures.

Republicans should not be so eager to abandon their belief in the value of a balanced budget, now that they have the clout to balance one.