Pandemonium seized a White House senior staff meeting last Wednesday after President Bush's aides learned the Department of Education had banned racially restricted scholarships. Their alarm was a clear reflection of the Republican Party's painful ambivalence about racial quotas.

That very week had once again pointed up the GOP's divided state of mind over whether it should forthrightly press for a colorblind society without special preferences. The Bush administration and the party generally are split over appealing to undoubted public antipathy toward quotas. What holds them back is fear of the racist label, a fear perhaps less rational than many seem to believe.

The unexpected decision by the Education Department and the president's swift reversal of it Tuesday at the insistence of White House Chief of Staff John Sununu crystallize the Republican dilemma: Can scholarships be reserved for blacks any more than for whites under the 1964 Civil Rights Act? The president's first comment, 48 hours after the first news of the change ordered by the Education Department, showed that Bush himself is torn down the middle, along with his party: He wanted a "readout" from his staff.

What he swiftly got from Sununu was more copout than readout. Sununu overruled virtually all the administration's own lawyers, including Presidential Counsel C. Boyden Gray, and left the controversy fuzzed up -- in the words of one key White House insider, "practically unreadable." But the effect seemed clear: no basic move to a colorblind society.

The week began with the two faces of the quota issue displayed on two fronts. In Washington, Sen. Phil Gramm (R-Texas) convened an elite selection of Republican leaders to stop internal squabbling and carve out an agenda. The only decisive note of the meeting was Gramm's determination that Republicans stand foursquare for a colorblind society against quotas. Nobody disagreed that this was a dynamite issue, both virtuous and politically rewarding.

The other front was Pinehurst, N.C., where Republican governors assembled for their winter meeting. William J. Bennett, nearing the end of his two-week run as Republican national chairman-designate, did not mention quotas in his speech. But after he spoke, Bennett was pummeled by reporters about his earlier defense of Sen. Jesse Helms's use of the issue in his North Carolina reelection campaign.

The next morning in Pinehurst, Dan Quayle got the same treatment over breakfast with reporters. The vice president sank into unfamiliar ground when he said he was opposed to quotas but favored "goals." Since "goals" are the euphemism for quotas, what was Quayle saying? His aides did not know.

In sum, Republicans see quotas as a wonderful issue that they are fearful to raise. That was never clearer than the morning after Quayle's breakfast when Bush aides awoke to read, on The New York Times' front page, about the Education Department's nine-day-old ruling against blacks-only scholarships. They were miffed, not only about learning the news tardily via the public prints but by the political fallout.

Who took what side did not follow normal patterns. Political aide Ed Rogers, a conservative Alabamian, was terribly upset over the impact on Republican fortunes. Even more worried was policy aide James Pinkerton, newly celebrated on the right as a conservative reformer. Pinkerton's bete noir, Budget Director Richard Darman, coolly asked what all the fuss was about. Hadn't the president just vetoed a civil rights bill because it set quotas?

Two of Bush's leading black appointments, Health and Human Services Secretary Louis Sullivan and Personnel Management Director Constance Newman, went into high gear to overturn the ruling. Its author at the Education Department, Assistant Secretary Michael Williams, was telephoned by a fellow black official in the administration and warned he would be persona non grata in "the community" if he did not retreat.

The political nature of the hysteria was confirmed when worried Bush aides emphasized not alleged damage to young blacks but the Page One play given the story by the Washington Post two days in a row. The calm defense of Williams's ruling by White House Counsel Gray and his staff, helped by vice presidential Chief of Staff William Kristol, delayed the White House reversal, but only for a couple of days.

Williams's defenders believe he put the colorblind issue in a clearer perspective than did the vetoed civil rights bill's implicit quotas. But now that the president has refused to say that scholarships should go to the needy regardless of race -- even though blacks would doubtless benefit disproportionately -- the GOP can abandon for now any thoughts of cultivating the quota issue.