HERBERT STEIN hopes his brand of Republicanism will now come back in favor. It may, he says, with the defeat of former Attorney General Dick Thornburgh in his bid for a Senate seat in Pennsylvania.Dr. Stein was chairman of the Council of Economic Advisers under President Nixon and considers himself a member of the moderate wing of the Republican Party - that wing of President Eisenhower, former New York Gov. Nelson Rockefeller, Mr. Nixon, and even President Bush "before 1980." That year, of course, was when Mr. Bush joined with Ronald Reagan and the conservative wing of their party to win control of the White House. Supply-side economists had the ear of the president. They regarded Stein as something of a traitor for his public criticism of the radical tax cuts and other measures of the Reagan administration. "There are Republicans and then there are Republicans," sighs Stein. In Pennsylvania, Harris Wofford, a Democrat, won Tuesday after a campaign blaming the Bush administration for the malaise in the economy and calling for national health insurance and an extension of unemployment benefits. Mr. Wofford's victory will give White House political strategists something to think about. They undoubtedly were delighted that the Federal Reserve Board on Wednesday chose to stimulate the economy further by cutting the discount rate, the interest it charges on loans to commercial banks, from 5 percent to 4.5 percent. And they probably saw the immediate decision of major commercial banks to drop their prime lending rate a half percentage point to 7.5 percent as icing on the cake. The election result could also fuel the debate within the administration about whether to back a tax cut or not. Stein, now a fellow at the American Enterprise Institute, holds that a tax cut is a poor idea. Considering the inability of economists to accurately predict the path of the economy, a temporary tax cut could stimulate activity just when a recovery is already taking off. The economic theory calling for using fiscal policy to counter the business cycle has lost a good deal of popularity in the last 30 years, he notes. Nor does Stein see the slowdown in the United States recovery as sufficiently serious to qualify as an emergency needing fiscal action. As for a permanent tax cut, Stein comments: "We are an undertaxed society. I don't think it is wise to give away revenue that we will need for the long run." This veteran analyst of federal economic policy figures federal revenues will be needed "to do something" about poverty, health care, and improving education. More funds should go to economic assistance in some poor parts of the world, he adds. And, though it is not his highest priority, he would like to see the massive federal deficit reduced. Nixon, he recalls, enlarged various poverty programs during his presidency. But nowadays "we are very miserly about these things," he says. Because of a lack of money, only 55 percent of children eligible for Head Start are actually getting the help. Programs to provide the unemployed or those on welfare with education and training are underfunded in most states. One often-mentioned hope of President Bush is a cut in the capital gains tax. Stein opposes it, saying that capital gains are already favored by tax law in that they aren't taxed until realized and that such gains can escape taxation at death. Moreover, though a cut in the taxation of capital gains might spur a rise in revenues briefly as holders of stock, property, or other appreciated assets sell them to take advantage of the lower tax, over five years or so Uncle Sam would lose revenue, he says. Most of the tax savings would go to the well-to-do. Nor would the move "do much for the economy." What makes his views different from those of liberal Democrats? Contrary to them, says Stein, he doesn't want to give the middle class any extra tax cuts or government benefits - just the 10 or 12 percent of the population that is really poor. He maintains the middle class are really living very well. If fringe benefits are added to cash wages, they have enjoyed moderate gains in the past 20 years, he asserts. "People have got a lot of wrong figures." Stein, obviously, is not running for office.