For 37 years, Murray Karpen has been serving quality food at his kosher-style delicatessen in Clifton, N.J. His wife Hilda is behind the counter with him. It's a family business, Karpen taking it over from his parents when he turned 21.

It was family business of another kind that brought the Karpens last week to the House Judiciary Committee's subcommittee on administrative law and government relations. Their oldest daughter, Ronni Karpen Moffitt, was a victim of state-sponsored terrorism, her death by car bombing on a Washington street occurring long before the current attacks against Americans by foreign terrorists. The Karpens' story, which ranges from years of grief over the loss of their 25-year-old daughter to indifference from the State Department, provides an answer to today's major question of what happens if terrorists invade the United States and kill Americans on America's streets. A government did send terrorists here, it did kill an American as well as a foreign diplomat. What happened? Nothing. It walked away from the murders untouched and unbothered.

Murray and Hilda Karpen's daughter was murdered on Massachusetts Avenue during the morning commuting hour of Sept. 21, 1976. She was driving to work -- at the Institute for Policy Studies -- with her husband Michael and Orlando Letelier, a former ambassador of Chile to the United States. Letelier was also killed. Their car was blown up by a bomb placed under the driver's seat by terrorists directed by the Chilean military junta of Augusto Pinochet. Four years later, a U.S. district court found that the Pinochet government was fully responsible for planning and carrying out the deaths.

The Karpens, as well as Cristian Letelier, the oldest of four sons of the slain diplomat, spoke before the House subcommittee in favor of an amendment to the Foreign Sovereign Immunities Act. Currently the law prevents the families of victims of state-sponsored terrorism from receiving money damages from the murdering foreign government, even when that government has commercial assets in America.

Among other prosperous businesses in the United States, the Chilean government operates LAN-Chile, an airline. In 1980, the court that found the junta guilty of murdering Moffitt and Letelier also ruled that the estates of the two were entitled to collect money from Chile. It was later ruled that the assets of the airline could be seized. A year after, a court of appeals reversed the judgment, saying that the Foreign Sovereign Immunities Act provided no means of enforcement. The court ruled that the Karpens and Leteliers' judgment against the Chilean terrorist government was correct but that Congress had created a right without a remedy. The court suggested that the families seek the support of the federal government.

A group of congressmen -- including the subcommittee chairman, Rep. Dan Glickman (D-Kan.) -- is backing an amendment that would broaden the law by allowing the commercial assets of a terrorist government to be seized. Other supporters include the American Bar Association. After hearing Ronald Reagan and George Shultz condemn state-sponsored terrorism in language unprecedented in tone and strength, the Karpens and Moffitts believed they would have an ally in the Reagan administration. They were dreaming.

Against the state terrorism of Qaddafi, there are damning speeches and bombing raids that kill Libyan civilians but against the terrorism of Pinochet, "diplomatic pressures" are best. Elizabeth Verville, a State Department attorney, told the subcommittee that "against the state itself, we can attempt to attain redress of private injury through diplomatic pressures."

With the families of the terrorists' victims only a few feet away, Verville preferred to put her sensitivities elsewhere. She said that we had better be careful of what laws we pass because, who knows, a terrorist regime might take offense: "The decisions on sanctions against the economic interests of the state or seizure of state property in such cases, with its concomitant potential for retaliation and disruption of broader relations between the United States and that country, might not always be best left solely a matter of judicial response to private petition."

This is the quiet-diplomacy pitch, to be carried out behind closed doors with no meddlesome judges allowed in, much less emotional families. As the Reagan administration ragingly calls for an all-out war against terrorists, here is a battle it should be leading. Terrorists killed two people -- one an American -- within a mile of the White House. The courts fingered the Pinochet government. The Reagan administration knows it was the Pinochet government. But it tells the Karpen and Letelier families, sorry, folks, fight your own war on terrorism.