The Democratic Party faces a decision that may determine control of the federal government for the rest of the decade. One choice is to lay back and wait for the Reagan policies to fail. This strategy suggests that the party has been basically right all along, and that voters who crossed over to Reagan will come to their senses as they face the reality of conservative government.

One of several deficiencies with this stand-pat strategy is the probability that the Reagan record by 1984 will be more ambiguous than flat-out failure. The 1980 election was more than a repudiation of Carter, as a number of former senators can attest; it expressed a populist revolt against much of the Democratic Party's agenda during the 1970s. The party gradually became identified with high taxes, runaway government spending, quotas, capitulation to special interest groups and erosion of productivity. Reagan is on the popular side of all these matters. If he is only partially successful with the economy, many voters will stick with him in preference to the redistributionism the Democrats went for

whole hog. Even if the political tides turn on Reagan, he could step aside in 1984, and a Bush campaign would shed the least successful Reagan policies while running against the "old liberalism."

The other choice for the Democrats is to reach agreement on a bold new agenda. Democrats have not been right all along on some key issues, and the party now needs to show what kind of program it stands for. Alas, party spokesmen and councils have thus far adopted a posture of carping about Reagan initiatives--witness the televised response to the State of the Union speech--while offering no clear alternatives.

Does anyone know what the Democratic Party's position is on taxation? Taxes have been falling like water torture upon the American people: federal and state income taxes, property taxes, sales taxes, excise taxes and all the other taxes. As taxes took more and more of the income of working people, the Democratic party sank deeper into redistribution schemes. Those who wanted to keep more of their income got sanctimonious speeches about compassion at the same time that a progressive tax system which is supposed to distribute the tax burden fairly was an obvious sham. In a system riddled with loopholes, those with lots of money shelter it from taxes while others pay the cost of government.

The political genius of Reagan's position on taxation has been his general attitude against taxes, and the clarity of his campaign plan for a 30 percent across-the-board cut in income taxes. This is not to say that Reagan's overall solution is correct. Tax loopholes have grown wider under Reagan. As a final insult to any semblance of fairness, our federal legislators have now removed their own salaries from most, if not all, of the tax burden.

Plenty of political space exists for Democrats to leapfrog Reagan on the tax mess. The party could bring forward a plan that is both effective and fair. One way of achieving this is flat tax rates within a progressive system; no exemptions or deductions permitted. All citizens and corporations pull on the oars of taxation evenly. Because more revenue would be raised--estimated at more than $225 billion this year--tax rates could be driven down at moderate income levels and the deficit could still be attacked.

Flat rates carry disadvantages. Government loses flexibility in stimulating the economy. Loss of deductions would hurt people of moderate income unless rates were lowered. Some sacrifices are necessary if we are to have a tax system that citizens view as fair, that raises enough revenue to operate government, and that can be understood by ordinary people. Voters may want this kind of tax system even more than they want tax relief.

If the benefits of flat rates to the country and to working people don't calculate, either economically or politically, the least the Democratic Party can do is bring forward a plan that sweeps aside loopholes permitting some to evade paying their fair share of government.

The initiative can be seized by the Democratic Party on other fronts. The American economy is not going to expand significantly or steadily without greatly enlarged markets overseas. The new markets are in the Third World, especially in large nations such as Nigeria, India, and Brazil. The Reagan administration has achieved little in this direction. Nations such as Nigeria scarcely exist in Reagan's mind, and his administration is unpopular in the Third World.

Before 1984, the Democratic Party has the opportunity to prepare a comprehensive plan for expanding the markets of American commerce. Highly visible missions to key Third World countries--led by Kennedy, Mondale, and other party leaders--would signal to voters that the party is working on plans for the domestic economy that are worth voting for.

Let the Democratic Party come out for national service--not a military draft but a system with non-military and military options for youth to serve the country. Reagan opposes this in favor of a more and more costly mercenary armed forces of dubious quality.

Complaining about the plight of the poor is right and admirable, but it does not add up to a program on the great issues or for governing the country. Rather than remaining mired in its tracks, the Democratic Party should reach for a new agenda, regardless of the fortunes of Ronald Reagan. Then the party is in a position to select the candidates who can best take the program to voters, and implement it if returned to power.