First, Interior Secretary James Watt told a meeting at the U.S. Chamber of Commerce that one of his advisory panels had "every kind of mix you can have. I have a black, I have a woman, two Jews and a cripple." The remark was greeted with laughter, although someone in the audience at the time attributed that to the general discomfort of everyone there. They did not know what to do.

Second, Watt's remarks got reported around the country. The chamber, which had been broadcasting the Watt appearance, made tapes available to the networks. And so that night there was James Watt once again putting his foot into his mouth and, once again, there were people saying he should resign as an embarrassment to the president.

Third, Watt sat down and with the help of some White House aides wrote out his apology. And whom did he apologize to? Was it the audience he offended and made uncomfortable? No. Was it blacks or women or Jews or the handicapped, none of whom were exactly thrilled by the remarks and some of whom were downright offended. No. None of them.

Was the apology directed to the members of the advisory panel--the one with blacks, Jews, women and "cripples?" With the exception of the handicapped person, not them, either. It was written and delivered to President Reagan who, at last glance, was neither black, Jewish, a woman or, with the exception of a hearing disability, handicapped. He accepted.

The White House now tells us that the matter is closed. The president retains confidence in James Watt--confidence, probably, that sooner or later he will do the same thing again. And there is ample reason for such confidence. Watt is a oral recidivist, a man who has said so many intemperate and insulting things over the years that his only excuse can be that he is a ventriloquist's dummy, mouthing someone else's words.

Watt is the man, after all, who has divided the electorate into liberals and Americans, empathized with Holocaust victims because he too has been persecuted, likened the environmental movement to the forces that created Nazism, warned American Jews that support for enviromental programs could cost them American support for Israel, referred to the Indian reservation system as an example of failed socialism and preferred the tacky Wayne Newton to the Beach Boys--perhaps his worst lapse of taste.

But all of that pales when compared with what is happening now. A case could be made that Watt is a mere clod and no bigot. His latest remark is so absurd it just could represent the attempt of an essentially humorless man raised in an ethnically homogenous region of the country to get off a joke. But whether Watt intended to insult is beside the point. The fact is that he did and neither he nor the administration has had the sensitivity to apologize to the people involved. Instead, you would think that Watt stepped on Reagan's toe.

The entire incident has been defined as an injury to the president and all the talk has been about how Watt has made it awkward for Ronald Reagan. There has been precious little said about the groups he insulted, about how it appears Watt sees people first and foremost as members of a sex, race or religious group and only incidentally as human beings.

But worse than that, nothing much is being said about the assumptions behind the statement--about Watt's mind-set. These are the words of a man whose view of America is constricted and provincial in the worst sense of the word. A joke is only funny if your audience shares your assumptions. The fact that the joke fell flat is not just an indication that Watt has the sense of humor of a mud wall, but rather that his entire view of America is cockeyed. We don't talk that way anymore. And the reason we don't talk that way is that it is offensive.

That is why James Watt should have apologized--not because he meant to offend, but because he did. What was in his mind is something we will never know. But whatever it is, the insult was compounded by apologizing to the wrong person and treating the matter as a political faux pas. First Watt insulted our sensitivities. Now he's insulting our intelligence.