WHEN WE think of Madison Square Garden, we think of fights and circuses -- so perhaps the choice of this arena for the 1992 Democratic National Convention will prove fitting. But as we have been saying for a good 10 years now, the best place in every way for a party to have a party is right here in the capital city. Washington is a natural -- especially if you match it against all the criteria that party site-selection committees normally list in weighing the candidacies of competing cities. It should have been in the running this time.

Let site selectors not forget that on the basis of its convention-center facilities, the supply of reasonably priced hotels, public transportation, trained security, proximity and number of airports, communications and media facilities and in other ways, Washington stands right up there with the best available to either party. It offers Democrats in particular the partisan comforts of a D.C.-Maryland-Virginia combination including city, suburban and state governments securely in their camp.

In fact, the convention-winning city tends to be chosen on the grounds of what message the geography of the site can send to hard-to-get voting blocs (Atlanta '88, Gateway to the South). It also matters what part of the country the party chairman calls home (San Francisco, Charles Manatt, '84). This time it's purely coincidental, of course, that national Democratic Chairman Ron Brown is from New York and is a lifelong friend of Mayor David Dinkins, who lobbied well for the Big Apple.

Part of Washington's problem is that it suffers from being too obvious. Its votes are taken for granted by the Democratic Party, which therefore feels it owes the place nothing. It also is year-round home and workplace to a great number of staff, lobbyists, members of Congress and other convention groupies, and therefore is not considered a fun-type away game. Then there is the immediate, not-so-slight matter of Washington's national image -- a distorted portrait drawn mostly from the troubles of the mayor. With luck and a good local election, this, too, shall pass and be put well aside by 1992.

'96, anyone?