The "fairness" issue that Walter F. Mondale and the Democrats once thought would rally their supporters to drive President Reagan from office has lost its cutting edge.

The issue that cut through the electorate like a laser beam in recession days is today far more diffuse, thanks in part to the economic recovery. For some erstwhile Democrats, it has even become another reason to vote for Reagan Nov. 6.

"Basically," said housewife Sue Daniels, 43, of suburban, affluent Mequon, Wis., "I'm going for Reagan because now I'm one of the 'haves' and he's gonna take a little less from me and give a little less to some of the people who don't have."

"A lot of people who are poor are poor through no fault of their own," Daniels said. "But unfortunately, Mondale's going to give my money to everybody, whether they're down and out because they're lazy or because they're not."

The fairness issue has not disappeared, as interviews in the diverse neighborhoods of this midwestern industrial city show. But it has lost the potency it had in 1982, when Democrats picked up 26 House seats and seven governorships, many in contests where anger with Reagan's policies drove voters to the polls in unexpectedly high numbers.

Shortly before those elections, Reagan aide Michael Horowitz had warned that "We are being savaged by the fairness issue." Reagan's approval rating slid toward its lowest point then, and Republican pollsters pondered even further losses in 1984.

The fairness issue gets its name from the debate over the impact of Reagan's tax and budget policies. National studies have found that those policies have widened the gap between rich and poor and, according to one of the studies, left black Americans worse off than they were in 1980 by "virtually every measure of economic status."

Today, the residue of the fairness issue remains, with national surveys showing that a majority of voters think Mondale's policies would be "fairer" than Reagan's. Mondale strategists expect their candidate to raise the fairness question in many ways in tonight's domestic policy debate with the president.

Yet fairness, it turns out, means vastly different things to different people in this predominantly Democratic city, where many indicators suggest that things have gotten worse during the Reagan years.

Like Sue Daniels, Lynn Hartwig, 41, who cast her first presidential vote for John F. Kennedy in 1960, voted for Democrat Jimmy Carter four years ago. Like Daniels, she said she will vote for Reagan Nov. 6, despite the budget cuts he steamed through Congress for various "safety net" programs, including Social Security and the school lunch program.

"By the time I get there, there probably won't be any Social Security," said Hartwig, who owns a card shop on the city's trendy, socially liberal and predominantly Democratic East Side. "My children go to a private school while I pay taxes for public schools. I've worked hard to get what I have and everbody else is going to have to, too," said Hartwig. "As far as free lunches and Social Security, that's too bad. If we can't afford it, we can't afford it."

Joan Butkowski, a Milwaukee bookkeeper in her fifties, admits to being somewhat torn by the fairness issue. "I'm living good," she said. "But some of his cuts on the poor and elderly have been a little too extreme." Reagan, she said, probably sides with special interests more than he does the average citizen. But if "Reagan puts too much in defense," she said, "Mondale would go overboard with too many domestic programs."

No one in her family has been hurt by Reagan's economic policies, Butkowski said, and when asked the classic Reagan question of whether she is better off now than four years ago, she responded, "definitely better off." "My husband is a Teamster. He's working 60 to 70 hours a week, and could work more if he wanted. My son is an over-the-road driver, in business for himself, and he has all the work he wants," Butkowski explained. "My daughter is a teacher. Another son works for the city of Stevens Point in the Parks Department. I have two married daughters. All of them are doing all right."

"I don't agree with Reagan on everything," she said. "But overall, he's doing a good job."

Howard Taft, 55, a toolmaker with five children who lives in suburban Saukville, is perplexed as well on the fairness issue.

"Reagan's done a lot of things that have hurt elderly people and poor people," he said.

"The tax structure he supports is for the wealthy. Working people are kind of left out," he said, adding that his parents have been hurt by cuts in Social Security and Medicare.

"But that's nowhere near enough to endorse Walter Mondale. I think his foreign policy stinks," said Taft. "I don't think he has the guts to stand up to our less friendly adversaries . . . . When Nov. 6 comes, I'm going to find a brand new quarter, flip it and decide who to vote for."

Even James C. McDonald, a former Roman Catholic priest who administers a community-oriented philanthropic program for Northwestern Mutual Life Insurance Co., said he has become uncertain about the fairness issue.

"I studied moral philosophy and I just don't know for sure what we mean by fairness," McDonald said. "This country does a better job than most nations in taking care of the needs of the jobless and the needy. We don't have people starving on the streets, as in Calcutta. But that doesn't mean everyone is treated fairly."

In 1980, Carter carried Milwaukee County with 52 percent of the vote, compared to 40 percent for Reagan. A Milwaukee Journal poll published last week showed Reagan leading by 11 points statewide, but found Mondale ahead by an identical margin in Milwaukee County.

The unemployment rate in Milwaukee County was 6.8 percent in August, below the 7.6 percent figure when Reagan took office in January 1981 and well below the 13.1 percent rate at the depth of the recession in December 1982.

But the 454,100 Milwaukeeans who had jobs then were only 3,800 more than were working when Reagan took office, and state labor statisticians said they could not determine how many had dropped out in frustration as the labor force shrank from 487,200 to 483,300.

Since 1979, however, Milwaukee and three adjoining counties have lost 29,700 jobs in manufacturing, where many of the highest blue-collar wages have been earned. In 1979, there were 25,000 employed in the construction industry. Now there are only 17,000.

"The biggest thing right now is still the jobs issue," said Thomas J. Parker, president of the the Milwaukee Central Labor Council. "They can show the economy coming back. But when you look around you find that the jobs that pay the taxes and buy the cars and build the houses are not the jobs that are coming back."

The labor council membership is down about 10 percent from its 100,000-member level in 1981.

Many union members live on the city's usually rock-ribbed Democratic Southside, and for a substantial number of them and their suburban neighbors, fairness is a voting issue that works in Mondale's favor. Reagan's cuts have hurt them, their relatives and their friends.

Julie Remitz, 28, of suburban St. Francis, considers Mondale the candidate who is "for the poor people and the blue collar workers like me. A lot of people are out of work because of Reagan. My girlfriend's husband is out of work . . . . And who knows if I'll have Medicare or Social Security by the time I retire."

For some voters with jobs in the public sector, Reagan's reductions in aid for education, the general retrenchment of government in the midst of the recession, and reduced federal assistance have offered another reason to vote Democratic.

Steve Martin, 36, a clinical social worker from Milwaukee, gives a firm "no" when asked the classic Reagan question: is he better off now than four years ago?

Cutbacks in funds for emotionally disturbed children and other social services spending reductions have given him less job security, he said.

Charlene Brandl, 41, of Plymouth, acknowledges that her income and that of her husband, the city's superintendent of schools, has gone up. But she now works full time instead of part time, and one of the reasons she took on the additional work, she said, was to earn money to pay for the college education of her five children -- made ineligible for federal grants because of new guidelines urged by the Reagan administration.

The strongest feelings on the fairness issue are heard in the black community on the city's North Side. There, Mondale is expected to win overwhelmingly, despite a rising tide that has made some blacks better off financially.

"The entire reign of Reagan has been perceived as antiblack and antilabor. The position is you're either rich or poor, and the poor includes the working class and those that are unemployed," said labor leader Martha Love, who is directing the Operation Big Vote effort to register North Side voters.

"The Reagan administration," said County Supervisor Terrence Pitts, "is one of the most repressive in the history of the nation as it affects blacks, browns, poor people and the elderly."

It is in the scattered neighborhoods of this community, long ago diffused by grassy stretches of deserted land and abandoned by neighborhood shopping centers, that the economic upturn is least apparent. Some of the neglect predates Reagan, but still provides an effective backdrop for potential mobilization against his policies.

For the first time in the city's history, organized youth gangs have begun to stalk the streets, as the unemployment rate for minority teen-agers hovers near 60 percent and one of every three minority youths lives below the official poverty level.

In the city's public schools, the average grades of ninth-grade black students in 1983 were .85 in mathematics, 1.13 in reading, 1.17 in English and 1.23 in science, based on a 4.0 grading system, according to education activist Howard L. Fuller, who also heads the state's Department of Employee Relations.

"You tell me what kind of future is going to exist for black children when you've got stuff like that," Fuller told a church audience last Sunday. "Don't you understand that for the first time in our history, our next generation is going to be dumber than we are?" He blamed the problem partly on an indifferent system with few blacks in positions of authority.

Four years ago, the soup kitchen at St. Benedict the Moor church fed 275 dinners daily; it now serves about 475 each day. Social workers said lines have lengthened outside a growing number of food pantries and cheese giveaway stations and utility-bill assistance outlets, and the system has become "overloaded."

Welfare rolls are bulging. Between June 1979 and September of this year, the number of people on general public assistance in Milwaukee County increased from 11,114 to 13,960, according to county social development officials.

During the same period, the number of food stamp cases rose from 29,870 to 49,508. Families receiving Aid to Families with Dependent Children increased from 25,383 to 29,601. That included a soaring increase in the number of families with an unemployed parent, from 450 to 3,527.

About 141,000 Milwaukeeans live in poverty -- "a little less than the entire population of Madison, the second largest city" in the state, said Milwaukee Mayor Henry Maier.

"The problem of the '80s is the absence of hope," said Donald Sykes, director of the county's Social Development Commission, one of the last vestiges of the war on poverty.

Sykes took over that post one year after the city's race riots in the summer of 1967. That year blacks and whites, following the Rev. James Groppi and comedian-activist Dick Gregory, marched en masse across the bridges of the Menomonee River Valley seeking open housing on the South Side.

"In '68," Sykes recalled, "people believed that they could make a difference in their lives, and that was more important than any program we had. Today, I call it the politics of meanness."

Two years ago, Mondale and other Democrats called it the politics of fairness, but now that argument has become more complex.

Many Milwaukeeans outside the inner city say the cost of social programs has become a drain on the middle class, and that it is not fair. Some say it is because Reagan's tax breaks have helped the rich most, and they are not paying their fair share. Others say the programs simply have not worked, and that it is unfair to continue asking them to pay for them.

Barbara Ulichny, a Democrat and state legislator from the city's affluent Near East Side, said her constituents are liberal on social issues but conservative on fiscal matters. They readily give money to charities, the arts, political campaigns and even soup kitchens, she said. But "it's something that they decided to do on their own. The government didn't decide to do it. I'm beginning to wonder myself about government programs that suppress people's will to do better."

Alderman Sandra Hoeh, whose district includes several Polish Catholic neighborhoods where black-on-white street crime is becoming more common, said she can win over some voters if she talks about Reagan's tax policies being unfair to the middle class.

"You don't go over there and talk social programs," Hoeh said. "The old image of throwing money at the central city is not popular."