"The more we look at this thing," said Rep. Joel Pritchard (R-Wash.)--this "thing" being the Reagan administration's $85 million "Project Democracy"-- "the more nervous I become over it." "Don't be nervous," replied Secretary of State George Shultz, "about holding that torch up there."

Both have a point. Shultz argued persuasively the importance of not letting our preoccupation with events cause us to neglect efforts to influence "the trends in attitudes and values which will shape the world in the decades to come." Promoting the study of democracy worldwide, education and cultural exchanges, encouragement to free institutions--all that makes sense.

The only questions have to do with how you go about it: noisily, expediently, selectively, with a heavy hype and made-in-America written all over it, with the ultimate objective of "destabilizing" the communist world; or realistically, consistently, even discreetly, with recognition of the distinction between transparent propaganda and worthy promotion of the example of democracy in a way that might make an enduring difference.

And that's where Pritchard and a number of other congressional critics have every right to be nervous. For the more you look at "Project Democracy" the less it looks like a torch and the more it resembles a fistful of Fourth-of-July sparklers, cherry bombs and a few fireworks that might be too hot to handle.

According to a top official involved in the preparation of "Project Democracy," at least 75 percent of what's in it consists of warmed-over variations on programs tried with varying success in the past. But the real problem is not with the contents. No harm, and perhaps some good, can come from "symposia on the nature of democratic societies" for foreign military leaders in traditionally civilian posts, or from a new magazine to "champion free communications" or from bringing young, future Third World leaders to this country to examine the workings of democracy on the spot.

The problem is with the hard, high-profile sell. "Our support for democracy should not be hidden," says Secretary Shultz. 'We should be proud to be seen to provide it." So there will be no denying the U.S. hand in the subsidizing of books about democracy (and, no doubt, the evils of communism) or in aiding free trade union movements, or in supporting indigenous democratic forces at work.

Now, all that--and more--used to be done in the old cold war days. But much of it was done covertly, largely through the CIA. The new thinking is that the overt way is healthier. Maybe. But it can be self-defeating when it takes on the appearance of the almighty United States intervening in the internal affairs of sovereign states. That's one reason why it used to be done without a U.S. stamp all over it.

The other reason was that administrations in those days didn't want to argue the case for this or that project out loud. You can see why now: there is already a brisk congressional debate. Rep. Stephen J. Solarz (D- N.Y.) was quick to raise a key question: "Are we prepared to provide help to democrats in such places as South Korea, the Philippines . . . Taiwan, where there are governments friendly to the United States but obviously with little respect for democracy?" Shultz conceded the danger of preaching "selective democracy."

Shultz told the committee he had been so powerfully impressed by the program when it had first been presented to him that he asked: "Why hasn't this been done before?" Right there lies what strikes me as perhaps the most troublesome aspect of "Project Democracy." The answer to Shultz's question is that it has been done before--almost all of it, in one way or another. It is a mark of this administration that so many of its principal figures, with however impressive credentials, have so dim an awareness of what actually has been tried before--of what has worked or hasn't, and why.