THE BILLY-BUSINESS is not so much an issue between Democrats and Republicans as an issue among Democrats. As the president's party gets ready to go to New York for its nominating convention, this latest episode is being widely and sorrowfully viewed as positively the last straw -- as distinct from all the other last straws. Mr. Carter's polls were already a nightmare. The latest samplings, which are about to be disclosed, are known to have turned spectacularly worse. And now this -- or so the lamentation goes.

As an issue, the Billy-business has another special charateristic. It is not just a distinctively internal Democratic issue, never mind how the Republicans relish and exploit it. It is also a distinctively personal issue: desolate Democrats don't seem to give that much of a hoot about any particular impropriety or "clarification of the record" or substantive point of law. They regard the whole debacle as just one more, possibly decisive, illustration of Jimmy Carter's special infirmity: a peculiar blend of rotten luck, heavy-handedness, and near-genius for converting the politically difficult into the politically disastrous in a kind of strung-out, serialized way that makes the whole thing immeasurably worse.

So the basic Carter argument (that this man has always managed in the end, somehow, to prevail over horrendous obstacles, to "surprise" the wise men and odd-makers and temperature-takers of our political society) is facing an unusually strenuous and perhaps mortal challenge: the anxious, caucusing Democrats -- or lots of them, anyway -- are now looking for Someone Else and not even making much of a secret of it. That Someone, allegedly, is not supposed to be Sen. Kennedy either.

This makes the negotiation all the more complex. As of last week the Democrats in the Carter and Kennedy camps were talking to each other about ways to make the convention an event from which the nominee might emerge with a fighting chance to win in November. Now there are talks going on concerning not just this but, for example, ways in which the friends of Someone Else might work with the Kennedy people to get the first ballot commitments to Mr. Carter loosened -- without ending up helping the Kennedy candidacy, which many of them oppose just as strongly as they oppose Jimmy Carter.

Wow. And you have also to consider this: what will or would be the post-dumping mood of the delegates? After all, many are people who became Carter delegates at a time when he was at a previous all-time popularity low and so must be accounted fairly faithful supporters. What will or would be the post-dumping mood of the southern and other voters, no matter what the polls say now, who supported Jimmy Carter in the primaries? You've got to suppose, if the past is any precedent, that from precisely the moment the dumping occurred, a great spate of sympathetic, O-my-God-what-have-we-dones and He-wasn't-really-all-that-bads would start gushing forth from the nation's press and political spokesmen and observers and preachers and writers of letters to the editor.

For the Democrats, then, the bad news is that they have 1) a president and candidate for reelection who seems almost determined to demonstrate every day that he can do things that make his record and reputation look worse; 2) a pressing claimant who feels entitled to pick up the pieces in the person of Sen. Kennedy, who was demonstrably, in contest after contest, even less popular with Democratic voters than Mr. Carter; and 3) two weeks either to come up with someone who could improve on all this or, more likely, to create a convention and post-convention holocaust from which the party would be months or years recovering. That, as we say, is the bad news. Now, for the really bad news: even if the Democrats should, miraculously, work out a peaceful transfer of the nomination to Someone Else, its troubles would be just be beginning.

It is worth remembering here what the original virtue of Mr. Carter's candidacy in 1976 appeared to be. He was politically unidentifiable in classic liberal/conservative terms. He was lots of things and no particular thing.His candidacy, in short, was in some respects a substitute for working out hugh problems of program, policy and belief the Democrats didn't want to face. They still haven't faced them. Sen. Jackson, Secretary Muskie, Sen. Kennedy, Rep. Udall and some of the other alternatives devoutly wished for by various Democrats represent day and night irreconcilable differences on certain fundamental subjects --East-West relations is one, the proper U.S. role in the world is another.On the domestic/economic front, the differences within the party are just as fundamental and acute.

Jimmy Carter had and has his virtues. But he was also the Democratic Party's way of finessing, failing to face up to, giant questions of whether many of their traditions and much of their handiwork were outmoded, wrong, irrelevant or even dangerous to the times we now live in. And where the Carter presidency's failures have not been personal, political failures of the man in charge, they have tended to reflect a tugging and hauling between all the different dogmas involved. Whomever the Democrats nominate, the results of that refusal to do the intellectually honest and politically hard work will plague them. Sometimes we wonder what Ronald Reagan did to deserve all this. He must have eaten a helluva lot of spinach as a kid and never, even once, missed his bedtime prayers.