For the Democrats the Central America issue is a confirmation hearing, and they are doing poorly.

The burden on a party that aspires to full national command is to compose a responsible opposition: to move the region toward peace without turning it to Sandinistas in Nicaragua and to the right-wing generals who may reach for power elsewhere if a ''second Cuba'' congeals in Managua.

But the Democrats are into illusion and flabbiness. You could see it in their handling of the Washington visit of Costa Rican President Oscar Arias. It cannot possibly serve Costa Rica for Arias to let the Democrats play him as their brave Latin peace-seeker standing up to the supposedly bellicose Ronald Reagan. But that is Arias's problem. The Democrats have their own problem of narrow partisanship. They are still hung up on yesterday's issue of contra aid, refusing to grant that on that one they have already all but won.

Meanwhile, they evade today's issue, which is to make sure Daniel Ortega keeps his peace pledges of Aug. 7. They ignore that while Reagan's opposition possesses effective parliamentary weapons to check his ambitions, Ortega's opposition possesses no similar weapons, and that Ortega can only be held to the mark, if at all, by moral and political pressures exerted by the other Latins and reinforced by the United States.

To the Reagan administration's insistence on holding the club of contra aid over the Sandinistas, Democrats ought to respond that the way to ensure compliance is to mobilize hemispheric democratic pressure on Ortega. Is that enough? No honest person can be sure but the Democrats are not being honest. They simply thrust blame on Reagan for clinging to the faded idea of contra aid and leave the way open for a cost-free Ortega default.

Arias keeps saying -- to resounding Democratic echoes -- that contra aid hands the Sandinistas endless alibis for their depredations against liberty. He is right, but only half right. Contra aid is a crutch for the Sandinistas, but it is also a lever pressing on them, the most important reason they signed on the line on Aug. 7.

The double nature of contra aid has broad implications. For the administration, it opens an opportunity to trade off aid for Nicaragua's ending of its menacing military ties to Cuba and the Soviet Union. This vital project lies beyond the reach of the Central America peace plan and can only be tackled in American-Nicaraguan discussions of the sort Washington so far spurns. Smart Democrats would make such pursuit of the American security interest their leading cause.

To the Democrats, however, the requirement is different. If you dismiss all contras as ''mercenaries'' and ''terrorists'' -- as so many Democrats instinctively and unreflectively do, censoring out the authentic democratic element and the simple-peasant base -- then you will feel no obligation to demand that the Sandinistas ''pay'' for the ending of contra aid by making democratic reforms.

But -- whatever you feel about the contras -- if you regard contra aid as a factor of great weight in the overall equation, you will insist that the Sandinistas, in return for being freed from military threat, compensate by moving toward a more open, pluralistic society.

People will continue to argue over the absolute and relative efficacy of military pressure and moral pressure on Daniel Ortega. But the evident Democratic position -- end military pressure, apply practically no moral pressure -- is indefensible posturing.

Ortega is shamelessly playing the Congress: he gave back two human rights figures he had unjustly imprisoned to a visiting liberal Democratic senator, Tom Harkin, who was excessively grateful, and he staged a confrontation with a Republican conservative, Bob Dole, who sort of asked for it but whom Ortega would have been wiser to soothe.

Congress, especially the Democrats, ought to play Ortega. They should realize he uses them not simply to close down contra aid but to help him make peace on his own comfortable terms. Half the House Democrats wrote Reagan the other day saying his interest in contra aid could scuttle peace. Did it not occur to some of them to write Daniel Ortega saying that his interest in power could scuttle democracy? Feeling guilty isn't enough.