"Lunatic" is one of Gerard Piel's favorite words when talking about the Reagan administration's budget priorities.

Piel, publisher of Scientific American, took office last week as president of the American Association for the Advancement of Science (AAAS), the world's largest general scientific society. He is the first journalist to head the organization.

In his first news conference as president of the Washington-based group, Piel spoke passionately of the need for more federal support for science education in primary and secondary schools.

He then attacked the administration's "lunatic space Strategic Defense Initiative." Instead of responding to the "crisis in science education," he said, "this administration, which is bankrupting this country with its lunatic deficits, proposes to pile on to an already swollen and extravagant military budget expenditures on a lunatic enterprise."

Deriding the national interest in the "psychic, mystic and the occult," Piel said there is "alarming evidence a very substantial portion of our public does not know how to tell nonsense from sense." Piel also criticized the level of public understanding on such technical issues as the energy supply, saying that "our citizenry is panicked by nonsense with respect to the safety of nuclear power plants, thrown into a total panic by a non-event at the Three Mile Island power plant in Pennsylvania" six years ago. Others have called it the nation's worst commercial nuclear accident.