I KNOW THAT THE NEWS may not have gotten to Washington yet, but one of the most impressive chapters in our recent political history is the resurgence of state government at the same time that the federal government has been failing.

The U.S. Advisory Commission on Intergovernmental Relations has never been widely known for its panache, but it does have a reputation for careful research and sound judgment. So it was noteworthy when ACIR, in an exhaustive study of the American federal system, found that "a comparison of the states [today] with those of 25 or even 10 years ago uncovers a remarkable transformation by state government." Whenever ACIR lets loose a generalization of that magnitude, it is safe to assume that the supporting evidence has been fairly well established. And it has.

David Broder was among the first to notice it, several years ago, when he wrote that "the contrast between the stumbling of the national government and the improving performance of state and local government is a largely unreported story. Individual states have moved out ahead of the federal government, justifying again their claim to be "laboratories of democracy."

Alan Rosenthal, director of Rutgers University's Eagleton Institute of Politics, has more recently expressed a concurring view. "The people who serve as state legislators are not what they used to be," Rosenthal wrote. "The new breed is young, well educated, bright, hard-working, aggressive, and sometimes zealous." The list of similar testimonies is long, and the evidence behind them is plentiful.

Why, then, does the idea of "returning power to the states" inspire something close to panic in the circles in which Outlook columnist William Greider [Against the Grain, Oct. 4] travels?

I have read and listened to otherwise intelligent people like him who simply cannot absorb the notion that states as political entities are anything but the relics of a bygone era. These people have watched as Ronald Reagan begins to pursue his version of federalism, gradually it has dawned on them that, God help us, the man is serious. He wants to return power to . . . the states .

The intensity of this reaction cannot be explained only as a reaction to Reagan's programs, or even to Reagan himself. Something else is at work -- some dogma, some article of faith, which leads otherwise reasonable souls to disregard plain facts about the states, and to cite instead a combination of dated images and static, half-formed ideas. If we can uncover the real source of the attitude, and I think we can, it may help to explain why so much current thinking about American politics, especially in Washington, seems so stale and uninviting.

A good place to begin the exploration is with Greider's Outlook column. The article purported to examine the idea of returning power to the states, and to find it wanting. It was built upon a long, engaging, and utterly irrelavant excursion through one state legislature, Kentucky's, as Greider saw it more than 20 years ago. Drawing on his experiences as a young reporter, he offered images of "rank and randy" politicians; of "engaging and improbable characters," including one legislator who managed to serve for 16 years without ever introducing a bill or giving a speech; of drunken politicians; of "graveyard politics;" of omnipresent "bag men." From these images he marched straight to a conclusion; Whatever ails America, the states are not the answer.

It was an entertaining trip -- so entertaining that one could travel almost all the way with him before realizing that Greider had no argument. I don't mean that his argument was inadequate - faulty in its premises, unclear in its presentation, wayward in its reasoning -- but that there was no argument. This talented writer disposed of an entire trend in American politics on the basis of a few flickering images from the past -- none of which resemble in any way the realities of state politics and government in 1981.

Greider did acknowledge, in passing, that things may be different today. As he put it, "the state legislatures have grown more serious in the last 20 years, I am told . . ." I am told? Surely a man who presumes to cover the entire landscape of American politics has some obligation to look or at least to respect the views of those who do. But Greider did not look -- and he is not alone: Especially in the splendid isolation along the Potomac, far too much discussion of the states and of American federalism is carried on in the same spirit and with the same respect for evidence.

For those who do elect to look, here is a preview of what you will find.

The transformation of the states began early in the 1970s. The Supreme Court's reapportionment decisions opened up state legislatures to a new generation of people. (Justice Sandra Day O'Connor, who served with distinction in the Arizona legislature, is a prominent but by no means unique example.) Those people launched what has been called "the most extensive wave of state institutional reform in history."

These reforms provided the basis for a broad range of innovation in policy development. To name just a few examples: States took the lead in containing the cost of health care, in adopting programs to compensate the victims of crime, in developing no-fault auto insurance. A majority of states became the principal source of funding for their public schools. State sunshine laws opened up the workings of government to the public. State "fiscal notes" and economic impact statements tracked the financial implications of proposed legislation.

Meanwhile, the states -- once accused of neglecting their local governments -- provided more grant funds to localities than did the federal government, and often targeted the funds more effectively. As Gov. George Busbee of Georgia has said, "few federal programs, if any, have as highly targeted an impact on needy communities as state assumption of welfare and education costs. And few federal programs, if any, can match the targeting impact of state 'circuit-breaker' programs, which take the sting out of local property taxes by protecting low-income households from inordinately large tax bills."

Some of these initiatives were adopted in nearly all of the states, some in only a few. Some were later adopted by the federal government, many were not. But all reflect the new and innovative spirit of state government. All are part of what ACIR has called the "largely unnoticed revolution" in the states.

What does this "revolution" mean? Are states better equipped than the federal government -- more specifically, are state legislatures better equipped than Congress -- to carry forward the domestic agenda of this country?

This is not, and will never be, a simple question of Congress or the states. If that choice ever existed, and it probably did not, it disappeared long ago. The relevant question is which functions should be assigned (and on what terms) to the states, and which to federal government.

The Reagan administration's program has only begun to answer this question, and some of its answers are less than satisfactory. It combines drastic cuts in the federal budget with modest, sometimes neglible transfers of authority to the states. This combination may mean that some worthwhile programs will simply disappear, through no fault of the states, unless the administration begins to provided real flexibility to the states -- and unless it can deliver on its pledge to return sources of revenue to the states.

It must be emphasized, though, that criticism of the Reagan program for returning power to the states does not refute the concept of returning power to the states. Such a refutation would have to address the performance of the states, the performance of the federal government, and the inherent nature of American federalism itself.

The states' performance is a matter of record. As for the federal government, surely the one indisputable fact in this debate is its sustained failure during the past decade. The American people recognized far sooner than did the public servants that Washington had lost its knack, if it had one, for slicing to the heart of a problem and responding with a lean, intelligent, humane government program.

These two facts -- the failure of the federal government and the resurgence of the states -- argue decisively for a shift of emphasis in American government. Instead of assuming, as we too often have, that programs "belong" in Washington, let us assume instead that programs belong in state capitals unless they can be shown to require federal intervention.

There are large and significant areas in which this can be shown. Benjamin Schuster, of Temple University's Center for the Study of Federalism, has noted that "the primary question (about federalism today), and the standard with whom to evaluate current trends, is this: Can we restore the states to their former strength and still pursue the uniform concept of justice for which the republic was founded?"

Fair enough: If 38 states are models of good government and 12 are denying essential rights to their citizens, then no argument about "state power" should be allowed to obstruct the pursuit of justice. That, I think, is the real concern of some critics of the states -- not that most states will not act responsibly, but that the door will be left open for some to act very irresponsibly. I am not persuaded that this is a serious danger, but I am more than willing to countenance a federal government strong enough to guard against it.

But the cases where federal supremacy is unmistakably required are fewer than one might imagine, and the opportunities for genuine state leadership are far more numerous than has generally been understood. This is not a "liberal" or "conservative" position; it is a fresh alternative, based on a new appreciation of the benefits of federalism and of decentralization as a political princple. It is a new vision for American politics.

It is apparent that William Greider, and a host of others who think as he does, are blind to that vision -- and that they have none of their own.