THE EDITORIAL writers of The Wall Street Journal knew very well why the stock market began to fall sharply in early October. It was Sen. Howell Heflin's announcement that he would vote against Robert Bork's nomination to the Supreme court that triggered a 91-point fall in the Dow Jones Industrials Index on Oct. 6.

In "The Bork Market," an Oct. 7 editorial aside, The Journal mused darkly that "the market may be starting to wonder where this offensive is taking the country."

Detecting a "Bork Market" is only the latest in The Journal's increasingly artful pirouettes as it seeks to dance away from the damage brought on by the "supply-side" economic experiment it has advocated so tirelessly. Specifically, in preaching the supply-side gospel, The Journal's editorialists have ignored:

The facts. The Journal has continued todefend the supply-side approach despite mounting evidence that some of its basic assumptions are flawed and that it has contributed to massive federal deficits.

The Journal's own past editorial stance. As recently as the late 1970s, The Journal argued that large deficits could have a crippling effect on the economy. That view seemed to change when Jimmy Carter left the White House and Ronald Reagan took office.

The supply-side experiment, you will recall, was supposed, through the magic of massive tax cuts, to so stimulate the investing and producing classes that they would flood the Treasury with revenues -- enough not only to offset the lower tax rates, but to close the budget gap as well. Instead it has lapsed into nothing other than an old-fashioned, demand-pulled boomlet, financed in part with foreign savings and mountains of new public debt, liberally laced with old-fashioned pork-barrel spending ladled out by all parties to our government, from the president (yes, the president) on down to junior legislators of both parties and chambers.

The remarkable thing about the October crash is this: The market had received absolutely no new, earth-shaking, fundamental information about the economy. All the relevant facts were already widely available to anyone prepared seriously to contemplate them. The best way, therefore, to understand the crash is as the sudden resolution of a simmering cognitive dissonance -- a wrestling match between two antithetical ideas about the state of our economy.

On one side of the wrestling match -- The Journal's side -- is a tenacious will to believe in President Reagan's particular version of supply-side economics (and there are competing versions). On the other side, as even the more passionate keepers of the supply-side flame should realize by now, is reality. The data -- and just plain common sense -- belie the supply-side faith.

After six years of supply-side living, the nation has piled up a massive government debt and a massive debt to foreign investors who have subsidized our consumption. As Business Week recently put it: "No one can plan on a growth miracle to solve the nation's problems. That was the false promise of supply-side voodoo. One way or another. . .Americans will have to pay a price for a solvent economy."

Time was when The Journal, too, would have scowled upon such profligacy by an administration. The Journal had for years lectured sternly on the "dangers of the deficit," arguing rather persuasively that heavy government borrowing would eat unduly into the nation's relatively small pool of savings and thus crowd out private investment. For example, in a 1980 editorial The Journal warned ominously that: " . . . the fiscal 1981 deficit will again be large, $45 billion and perhaps a great deal more . . . . It is this burden, not monetarism, that is causing the economy to wallow in its attempt to recover. The problem will continue to exist as long as the government insists on slicing a huge chunk of the limited supply of saving and using it to feed consumption. Mr. Carter has been around long enough to understand this, but it is always convenient to blame someone else."

The Journal gave Carter another tongue lashing in its parting shot of Jan. 16, 1981, deploring expectations that the deficit would top $55 billion in 1981 and almost $28 billion the year after. The Journal also scorned the Carter budgeteers for mininizing the importance of the deficit by arguing that as a percent of GNP, it had declined to 0.9 percent in fiscal 1982 from 2.3 percent in fiscal 1980 and 4 percent in fiscal 1976. This, snorted the Journal, "is a moot exercise at best, dishonest at worst". The Journal noted further that the way things were going, "we'd be staring at a budget deficit in fiscal 1982 of a lot closer to $100 billion."

A $100 billion deficit -- oy vey! It was, as The Journal then put it, "a scary prospect," even if it was just hypothetical.

Now, some six years of "supply-side" economics later -- with a doubling of the public debt to $2 trillion in that short span, with annual deficits routinely in the hundreds of billions, with a net debt to foreigners that has risen to near half a trillion dollars -- the nation would sigh in relief if Reagan submitted to Congress a budget with a deficit honestly projected at "only" $100 billion.

But the legacy of debt is only half as stunning as the intellectual legacy the experiment has left in its wake. I am speaking here of that truly wondrous set of new "insights" on economics to which we have been treated by The Journal's own editorialists and by sundry "supply-side" pundits who have graced its editorial pages. It is a richly textured treasure trove, one likely to give comfort to generations of profligate administrations yet to come.

Among the new lessons that The Journal's editorialists have learned since Carter left office is that there is more than one way to look at a deficit. Here they are in June 1984, in an editorial entitled the "Deficit Monster, RIP" complaining that people were paying too much attention to the mere size of the deficit, then running about $185 billion as it turned out. "Indeed, if your worry is about the deficit's impact on interest rates," they argued, "the relevant figure is government-sector demands on credit markets. So you have to factor in surpluses at the state and local level . . . which gives you net government credit demands of only $100 billion.

"Only $100 billion!" How wondrously the political stripes of the man in the White House have altered the prism through which The Journal now beholds the world! Had poor Jimmy Carter been allowed to count the roughly $34 billion state-and-local surplus in 1981, he could have escaped The Journal's tongue lashing.

Carter, you will recall, also found himself behind The Journal's woodshed for the (legitimate) practice of expressing deficits as a percentage of GNP. But in the Reagan era, The Journal, without apology, has changed its mind. A July 1984 editorial, "Telling It Like It Isn't", prescribes that very practice in support of its contention that, in the heat of the 1984 presidential contest, "it is now time for both parties to be talking about further tax cutting and stop wailing about . . . the deficit."

Another new article of faith for The Journal is that there is really no difference between tax-financed and deficit-financed federal budgets; only the level of expenditures matters. In August 1985 The Journal summed it up this way: "What concerns us is not the budget deficit per se; we don't think the large federal deficits will in and of themselves bring down the republic. What concerns us is the {government's} total claim on resources."

The Journal's obsession with the spending side of the ledger ignores that the United States remains the least taxed of fully-industrialized nations, Japan excepted. But a fiscal conservative like myself could nevertheless agree that our current and even a lower ratio of taxes to GNP could be maintained if we chased the middle- and upper-income classes away from the public trough -- for example, if wealthy farmers could be taught to stand on their own feet or if well-to-do retired persons would pay more for their own health care. But we haven't and, apparently, we can't.

Fully in tune with the White House, The Journal has blamed this failure exclusively on an irresponsible Congress. But as principled conservative columnist and Reagan friend George Will has pointed out on several occasions, the fact remains that Congress has passed exactly as many balanced budgets as the president has submitted to it and, indeed, has spent just about the totals the president called for.

Skeptical readers may verify this point by consulting the non-editorial sections of The Journal. A table printed there last January disclosed that, during 1982-86, the president requested budget outlays totaling $4.307 trillion, while actual spending amounted to $4.342 trillion -- a trifling difference of less than one percentage point over four years!

And was it not the president himself who boasted, during a swing through Illinois in the fall campaign of 1986, that his administration had "spent more on farm supports in that one year alone {$26 billion} than previous presidents during their entire tenure"? One would have assumed that such unabashed pork-barrel spending would have triggered near-hysterical responses from The Journal's editors. But instead we have had unidirectional lectures such as the July 1985 editorial lamentation: "Congress this week will prove once and for all that it is institutionally incapable of federal budget management . . . . Such is the level of political courage in the House and Senate that members don't want to face their rural constituences during a rececession without having first written a generous check."

Why, indeed, should they, rather than just follow their "courageous" leader? The editors go on: "Mr. Reagan is offering to do the {cutting of the farm bill } for them if they will give him a line item veto." We can only admire The Journal's depth of faith in an instinctively populist president who has never shown much stomach for wielding the budget knife in the direction of any politically powerful constituency.

During some 20 years of teaching general economics, finance and accounting, I have consistently praised The Journal to my students as simply the finest daily on economics and business, and I do that to this day. The Journal's staff of writers and copy editors is superbly professional. Its op-ed pages contain countless intellectual nuggets better crafted than many a textbook. And even the writing on the left side of the editorial page can be brilliant and principled -- as, for example, The Journal's consistent defense of free trade and deregulation.

So it is more with sadness than amusement that I have watched The Journal's editorial page twist and shout ever more bewilderingly in its defense of the fiscal policy of this president. That loyalty and affection would be admirable, had it not also led The Journal to prop up an economic policy that, whatever its appeal in 1981, simply lacks empirical support today, and whose practice has led us to assume mortgages that our children will have to amortize.

Uwe Reinhardt is professor of political economy at Princeton University.