At midyear, the Reagan administration has reassessed the economy and maintains that it is satisfied with what it sees: declining unemployment, near-term economic growth of 3 to 4 percent, no horrendous outbreak of inflation, and a turnaround in exports that suggests "the worst is over" on the trade deficit front.

"This means that instead of providing a drag on gross national product, U.S. trade has now switched to a positive force on U.S. economic growth," Commerce Secretary Malcolm Baldrige told the Joint Economic Committee of Congress.

Baldrige sees American manufacturing companies gradually regaining a competitive edge, and is quite eloquent in citing cases where they "are getting leaner, because they have to."

If American producers hold the price line as the Japanese are forced to raise theirs, they can increase their market shares, Baldrige notes. "I believe American management is getting better because I see more and more chief executive officers getting fired -- from Fortune 500 companies -- and that didn't used to be the case. I know 12 or 15 CEOS (who have been fired), and the new fellow knows why he's been put in there -- he has to compete."

By and large, private economists don't disagree with the short-term outlook as laid out by Baldrige. But a number of analysts think that the Reagan administration is sugar coating a massive weakness still prevalent in the economy that is symbolized by the sharp jump in America's external debt.

The United States, once the leading creditor nation, is now the biggest debtor, owing $264 billion. Counting the additional debt we are piling up this year, we are now somewhere between $300 and $400 billion in the red. Where this process ends, no one knows. Some estimate the total could run between $600 billion and $1 trillion in the 1990s.

But in his testimony, Baldrige played down the seriousness of the situation, to the point of using the euphemism "net negative international investment position" of the United States, instead of referring to the United States as a debtor nation. (But then, this is an administration that refers to taxes as "revenue enhancement.")

Baldrige said that the U.S. "net negative international investment position" of $264 billion is only 6 percent of GNP, much smaller than that of other large debtors. Brazil's $100 billion external debt, for example, is 40 percent of its GNP. And, Baldrige adds, even a bigger American debt in the 1990s would require an annual servicing cost of less than 1 percent of GNP.

Both of those statements are true. But the important point, as JEC Chairman Paul Sarbanes (D-Md.) has pointed out, is that "no debtor country has ever been a strong power." The price that America is paying for having crossed the line from creditor to debtor status is not only the annual cost of carrying that much debt, but also a reduction in America's global clout.

"President Reagan's failure at the Venice summit to achieve his objectives can in part be attributed to the hard reality that a heavy debtor nation is in a relatively weak position to insist that others comply with its economic wishes," Goldman, Sachs & Co. Vice President Robert Hormats told the JEC.

Baldrige recognizes that the huge trade deficit that causes the pileup of obligations abroad cannot be tolerated and that the recent trade gains derived from a decline in the dollar against major currencies haven't gone far enough. "One way or another," he said, "the U.S. trade deficit has to be brought down to zero."

What bothers Sarbanes and other critics is that the administration does not have a credible program for doing just that. Baldrige claimed that "the now realistic dollar exchange rate, together with improved competitiveness stemming from increased productivity, efficiency and quality, will ensure eventual elimination of the large manufacturing trade deficits."

Realistic dollar exchange rate? That's a pipe dream, say some experts. The administration, fearing that a sharply lower dollar will push interest rates up -- just in time for next year's presidential campaign -- agreed at the Louvre Palace meeting of finance ministers last February to stabilize the dollar around 153 yen and 1.80 German marks. Since then the dollar has dropped modestly to about 145 yen and seems to be holding there.

C. Fred Bergsten of the Institute for International Economics, also testifying before the JEC, snapped that the finance ministers "are simply not credible" when they assert that such rates are in line with underlying equilibrium among the United States, Japan and West Germany. That would be true only if one believed that U.S. current account deficits around $100 billion and Japanese surpluses of $75 billion could go on forever.

Hormats observes that the cost of trying to defend the Louvre accord has been $50 billion in central bank intervention and a full 2 point jump in interest rates. To get significant further improvement in the trade deficit, a Goldman, Sachs projection sees the need for a gradual drop in the dollar to about 125 yen and 1.55 German marks over the next 24 months.

At some point, as Bergsten says, foreigners who have been financing the American budget deficit by buying Treasury bills and bonds will stop doing so. Or, as a huge trade deficit persists, virulent protectionism -- still held in check -- will break out in full force. Bergsten, increasingly gloomy over the drying up of private investment in the dollar -- financing from abroad this year has all been in the form of central bank money -- sees the United States, and along with it the rest of the global economy, perched on the edge of a serious recession.

And how about Baldrige's optimistic assessment about a new competitive edge being displayed by American industry? There are some encouraging signs, and he enumerated them. But there's a long way to go. The National Association of Manufacturers' Jerry Jasinowski pointed out that there are some factors that may offset favorable trade developments, including the leeway available to successful foreign companies to cut their profit margins in order to maintain market shares.

Baldrige agrees that many more basic changes must occur in American industry, involving better quality of products, more expenditures for research and development in nonmilitary product lines, and major changes in the educational system before the trade deficit problem is fully resolved.

"The problem," summed up Sarbanes, "is that Baldrige correctly points to what's needed, and then the administration comes in and cuts the budget for education and these other programs."