EIGHT MONTHS AGO, they were hailing "The Baker Regency." With the ouster of "Diamond Don" Regan and the arrival in the White House of the Great Compromiser from East Tennessee, we were told, a new era of cooperation would would ensue. Right-wing ideology would give way to flexible pragmatism; fruitful compromise would replace sterile confrontation. All Washington was humming "Happy Days are Here Again."

Eight months later, the Reagan Revolution appears to be guttering out and the president's proudest achievements are in jeopardy.

The Contras are about to be defunded; SDI is in trouble; the defense buildup has been halted and reversed; the most qualified Supreme Court nominee since Felix Frankfurter has been trashed by the Senate; and no one has been punished.

With the stock market crash, the Baker Boys and Alan Greenspan quickly corralled and then stampeded the president into abandoning his principled position against new taxes. Monday, the first summit meeting to table new taxes was held, and the market plunged 157 points. What financial genius was it, one wonders, who persuaded this president that a 500-point drop in the Dow was a collective primal scream for higher taxes?

The president's time of troubles is traceable directly to having listened to counselors whose political advice has never -- never -- been as good as Ronald Reagan's political instincts.

All his career, for example, Ronald Reagan has preached that a strong dollar means a strong America.

Yet for two years, his advisers, egged on by the special interests, have been systematically talking down the U.S. dollar. Now, the trade deficit has ballooned to record dimensions, but those cheapened dollars no longer bring the same number of cars, computers and machine tools into the United States; and America's enlisted men and women find themselves among the near poor in the very countries they have been sent to defend.

Twelve months ago, in campaign '86, the crowds were chanting, "Four More Years!" Today, the Republican Party faces the real possibility of being swept from power in 1988; and, in travels around the country, one detects little anguish over the prospect.

What happened?

Like Esau, Reagan was persuaded to trade his birthright for a mess of pottage. The president is paying a heavy price for having deeded over so generous a slice of his political inheritance to a party establishment whose disenfranchisement, after all, was supposed to be first order of business of the Reagan Revolution.

"Know thy enemy, know thyself; in a thousand battles, a thousand victories," wrote Sun Tzu centuries ago. The central failing of the moderate Republicans -- the Baker Boys and the White House staff -- is that they do not understand the Reagan coalition; they do not understand "cause" politics; they do not understand the philosophical struggle on-going in America. They are living in a simpler past.

Ronald Reagan has always been a movement politician, a podium politician, not some back-room magician like LBJ; he excels on the platform and before the camera, making the case, with clarity and conviction, for some great cause -- be it saving the Panama Canal, or leading the West against the Evil Empire.

"Better to lose in a cause that will someday triumph than triumph in a cause that will one day fail," is a Wilsonian sentiment this president intuitively understands. "Make them feel the heat, and they will see the light," is among his aphorisms. That is Ronald Reagan's style.

Howard Baker, however, and the congressional corridor-walkers he brought into the White House, are of another breed. They are kennel-fed hounds, not hunting hounds. They seek compromise before the battle. They recoil from the uncontrolled politics of passion, and excel at the politics of log-rolling, back-scratching and deal-making. Almost to a man veterans of that soul-stifling institution on Jenkins Hill, their idea of victory is some photo opportunity in the final edition of the Post of a crowd of weary, unshaven but smiling Democrats and Republicans -- congressmen and aides alike -- who have just hammered out some "bipartisan agreement" in an all-night session in committee assembled.

"Howard Baker is just being Howard Baker," is how Paul Weyrich has put it. Precisely. A decent, honorable man of the middle, Howard Baker does not understand the us-versus-them politics of the flank that today dominates both parties.

Above all, Baker does not understand his adveraries on the left. Socialist in its economics, secularist in belief, morally self-righteous, anti-anti-Communist, the Left has converted the Democratic Party of Roosevelt, Truman and Johnson into an American version of the British Labor Party. This is not an institution with which Republicans can honorably compromise; because, down deep, this Jesse-Teddy-Mario party believes the movement that brought Ronald Reagan to power is anti-black, anti-poor, anti-peace and, hence, inherently illegimate.

This is why Speaker O'Neill, in cloakroom commentary, can be so contemptuous of Ronald Reagan; this is why Robert Bork can be savaged, with a clear conscience, by the likes of Biden, Kennedy, Leahy and Metzenbaum. In destroying Bork's nomination, these men truly believed they were sheltering America from something evil. And this is why the regency of Howard Baker, late of the Dirksen School of Politics, has been marked by frustration and failure. The chief of staff has been trying to attain the unattainable. Honorable compromise with a Congress whose hidden agenda is the political ruin of the president of the United States.

Ollie North, who came out of the Marine Corps, instinctively understood what some Republicans never seem to register. The Left is not after the truth; it is after power, and it is after us. Ollie didn't wait for them to come after him; he went after them first.

Profoundly uncomfortable with "moral" issues, the congressional Republican abhors a political brawl. By breeding, he is a political diplomat, not a warrior. Dodd, Harken, Kerry, Cranston and Kennedy are, after all, "colleagues" with whom he daily works. He does not like to fight them; and he does not really know how. And, unfortunately, you cannot make an attack dog out of a cocker spaniel.

What he fails to understand, however, is that, as Norman Podhoretz writes, there is a "war going on in this country." It is a civil war, one that is at root a religious war; it is a war over our conflicting beliefs about good and evil, morality and immorality, justice and injustice, and, yes, even patriotism and treason. This is why American politics has taken on so savage an aspect, why so many issues cannot be "compromised," but must be decided, up or down, in open conflict. This is why the congressional Republican, nurtured in the convivial "my-distinguished-colleague" and "let's-split-the-difference" atmosphere of the cloakroom so often proves ineffectual in the West Wing.

Ronald Reagan's White House has always been seen by his devoted disciples as the command post of a great and glorious counter-revolution. Correspondingly, the Left has viewed the Reagan presidency as a throwback, a threat to every progressive reform of the last 50 years.

Unsurprisingly, then, Howard Baker's proclivity to re-package the president as a conventional leader in the Ford-Eisenhower mold, has been viewed by the Right as another Beltway Betrayal, and by the Left as a cynical attempt to rehabilitate a reactionary magistrate for whom the "Nixon solution" is the proper reprisal.

The handling of the Bork nomination provides the textbook case.

With the President's bold decision to nominate Bork, the White House put at risk the entire legacy of the Warren era. Left and Right knew instantly what was at stake. While Bork is indeed a "strict constructionist," not a "conservative activist," his elevation, as decisive fifth vote on the Court, could, within months, have brought an end to quotas, restored the states' power to eradicate pornography, reversed Roe v. Wade, and rung down the curtain on the Second Reconstruction and the Court's 30 years' war against Christianity in the public schools.

Having placed in peril all the captured provinces of the Warren ascendancy, the White House sauntered off to Santa Barbara for a month of sun and fun; and came back to pronounce itself "shocked, shocked" to find a lynch mob assembled and looking for the aforementioned Robert Bork.

Excuse me, but what in the hell did they expect?

While the Left sensed, correctly, that everything was at stake, the White House took pains to persuade the rest of us that little was at stake. Hearing reassurances that Bork would not be overturning established precedent, conservatives began to wonder just why Bork was worth the fight. With white conservatives confused and inert, Southern Democrats naturally threw one to their black constituents, who were inflamed.

Thus, the White House wound up with the worst of possible worlds. A distinguished judge was savaged; the president was humiliated; and the president's supporters were left with wimpish protestations that the very, very last thing the administration has in mind is appointing justices who would overturn the established precedents of the Supreme Court.

Before the liberals began prattling on about Bork being anti-civil rights, anti-women, anti-privacy, the White House should have mounted a national campaign, charging Bork's enemies with being pro-abortion, pro-quota, pro-busing, pro-pornography and anti-prayer. Because those were the issues; Specter, DeConcini and Heflin should have been justifying themselves, not Robert Bork.

Instead, we lost the judge -- and lost the issue, too.

And this may be a harbinger of things to come. If the moderate Republicans who managed Bork's campaign are so inept as to be unable to prevail, either in Congress or the court of public opinion, when the stake is a single Supreme Court seat, how do they expect to prevail when the stake is the presidency itself?

On Nicaragua, too, the White House seems to have tossed away a winning hand.

After Ollie North's blazing day in the sun, Congress was reeling; and the president could have administered the knock-down blow, demanding twice the Contra aid he got in 1986. Instead, the White House went for a bipartisan deal, a "Reagan-Wright peace plan," containing, White House aides tell me, an astonishing secret codicil whereby the president, at Howard Baker's recommendation, gave Jim Wright immunity from attack from the Bully Pulpit for the duration of the "peace process." In the most important fight remaining in the Reagan Revolution, adjutant Baker apparently persuaded the Commander-in-Chief to spike??? his biggest gun.

Smelling sell-out, the Central American Republics cut their own deal, and who can blame them?

The Nobel Peace Prize notwithstanding, however, the Arias Plan is not about "peace." It is a cynical bargain whereby the Central American republics scuttle the resistance, in prayerful hope that Ortega and Borge will leave them alone. But Daniel Ortega and Tomas Borge are not going to leave them alone, and they are not going to "democratize," for the good and sufficient reason that they are not democrats.

Deja vu! The Arias Peace Plan is the Paris Peace Accords revisited, a strategic deception on the part of the communists, an act of self-delusion on the part of the Americans.

As with Vietnam, force is going to decide the future of Central America. And if the Contras are disbanded, the only force left on the continent capable of preventing Managua from turning Honduras and Costa Rica into Cambodia and Laos is the armed forces of the United States. While the White House could not prevent Congress from selling out, at least the White House could have guaranteed that, this time, the Democratic Party would be held accountable.

Calling themselves hard-headed pragmatists, the Republican moderates are, in truth, hopeless romantics. They truly believe America's security is advanced through summit meetings and SALT agreements; they earnestly, honestly, continue to search for the Holy Grail of a foreign policy "consensus" lost, irretrievably, two decades ago, in the Mekong Delta.

As Grenada, Libya and the president's dispatch of the fleet to the Gulf demonstrate, consensus follows action, it does not precede it. In crises like the shuttle tragedy (and the market crash), people turn instinctively to the president, not to the Hill, not to some "bipartisan" committee or commission that appeals to the congressional mindset, because it means we can all share the credit, or all evade the responsibility.

To rush, instinctively, in a crisis, to one of those "Last Supper" photo ops, where Reagan is flanked by Bartles and Jaymes, is to adjure leadership, not exercise it, to forfeit opportunity, not seize it. In the modern era, Congress is no longer first branch of government, and the people know it.

What the president should do in the current financial crisis is to act as leader. Pledge a veto of any tax increase, demand Congress pull down, now, the protectionist trade bill which contributed to the crash, call for a capital-gains tax holiday for the six months and a permanent 60-percent capital gains exclusion, and demand impoundment and recession authority to make the spending cuts Congress has shown itself incapable of making.

As the incumbent party in 1988, the Republicans should adopt as a model the "Give 'em Hell" campaign of incumbent Harry Truman in 1948. The cocker spaniels had better learn how to fight now, or, come 1989, they may find themselves outside their warm and comfortable kennel, where they will have to learn.

Patrick Buchanan is a commentator and former White House communications director.