The United States Olympic Commitee has suggested that Jimmy Carter strike a medal for those American athletes who have given up their dreams at his request. The USOC says it would be fully appropriate if Carter invited the would-have-been Olympians to a state dinner, perhaps a national festival at the Kennedy Center. These are wonderful ideas.

Peter Schnugg hates them.

Peter Schnugg is steamed. He is a water polo player from Orinda, Calif., who at 28 had his last shot at the olympics this year. He missed out in 1972 when he was an alternate on the team, and in '76 the team failed to qualify for the Olympics. This year, the U.S. water polo team is No. 2 in the world -- with no Olympics to go to.

Schnugg is steamed. This is important. It is one thing if Bill Rodgers runs off at the mouth about having to stay away from Moscow. Rodgers stood to get rich selling running shoes if he won the Moscow marathon. Skeets Nehemiah geared his life -- he wants to be a television personality -- to the fame the olympics would bring.

For Peter Schnugg, the Olympics mean nothing in dollars. No water polo player ever endorsed a breakfast cereal. Chances are, most Americans think water polo is a silly game, a game in which horses are ridden under water. It is, in fact, a fierce game, a frightening blend of swimming, rugby, basketball and hand-to-hand combat. The main thing a water polo player gets from the game is a lot of facial scars.

And, every four years, he gets a chance to play in the Olympics where he can make real the dream that has driven him for a dozen years. From Miramonte High School to the University of California, from 5,000-yard workouts at dawn to thousands of brutal games that only a handful of people cared about. Peter Schnugg kept at it because he liked it, he was good at it and he wanted to be the best, wanted it so much he gave up part of his life to see if he could do it.

Out of Berkeley with a master's degree in business administration, Schnugg had been a stockbroker. He quit that to manage a swim club, the better to work at water polo. He is a driver on the U.S. team. That's the equivalent of basketball's shooting guard, a man counted on to score. Runner-up in the 1979 world championships, the U.S. won the Pan American Games and came to this spring No. 2 in the world.

Now it means nothing.

No Olympics.

Peter Schnugg is steamed

It's not so much the fact of a boycott.

He can understand that. A telegram came to his house two weeks ago. It asked him as the elected representative of the U.S. water polo team, to vote last weekend in favor of a boycott. The telegram was long and full of words such as "national security" and "Afghanistan" and "Soviet Union." The telegram was signed by Jimmy Carter.

That was Peter Schnugg's first brush with big-time politics.

It was not the last.

Before receiving the president's telegram, Schnugg said he was against the boycott on gut instinct. It didn't seem right that the athletes should give up all those years of work. He didn't really think much about it other than to read an occasional newspaper story. It just didn't seem real.

"But when you get a telegram from the president addressed directly to you, and it's talking about national security, you say, 'Hey, this guy is serious,'" Schnugg said yesterday.

When Schnugg went to Colorado Springs for the USOC vote on the proposed boycott, he was further introduced to the world of big-time politics, brass knuckles division. By then, Carter's cutups had influenced corporations to withhold their contributions to the USOC, had threatened legal action to keep athletes out of Moscow, had implied that the tax-exempt status of sports organizations could be examined.

"The administration twisted arms," Schnugg said. "I'm not learned in politics, and maybe I'm full of naivete but a lot of things the president did shocked me. Those are the things that scared the Olympic committee."

Schnugg believes this was a political operation that got out of hand.

"If you look way back to January, Carter ran the boycott idea up the flagpole and 80 percent of Americans saluted," he said."So, like any shrewd politician, he latched onto it. What started out to be a small, insignificant idea turned into a major event because of Carter's refusal to change his thinking.

"And that refusal came because he had failed in other places. He failed in stopping Russia, he failed in Iran and he was not going to fail in this. It took on much greater significance than it deserves. It's just the Olympics.

"And when the rest of the world wasn't supporting him, Carter said, 'I gotta win this battle.' Carter pulled no punches. I was shocked." s

As it came time to vote, Schnugg was perplexed. Zbigniew brzezinski had spoken of national security to the representatives. Vice President Mondale, far from believing this is just the Olympics, put the confrontation on a doomsday level: "History holds its breath," he told the voters, "for what is at stake is no less than the future security of the civilized world."

The world depends on a water polo driver's vote?

"Brzezinski said the U.S. was entering into a touchy time," Schnugg said. "William Simon (former Treasury secretary now USOC treasurer) said we were closer to World War III than ever. No doubt that affected a lot of people but what it came down to was, 'Who do you believe?' I had a difficult time accepting everything the president said. I just couldn't say I honestly believed him."

Schnugg voted to go to Moscow.

"I had to vote my heart, and if the president wanted to take it away from us, he could."

Was the vote to boycott a victory for the principle of human rights? Or had the Olympians simply knuckled under to the undisguised pressure of a scrambling administration?

"It was very difficult to vote the way I did," Schnugg said. "I mean, it was the president, it was his office, it was him saying it was a matter of national security. It was very difficult to vote against him, especiallly when you throw in the financial difficulties the USOC would face if it had voted to go.

"I guess we did knuckle under, but, hey, we didn't have a chance. Us against Carter was like our water polo team playing Miss Teacher's kindergarten class. We're in two different leagues."

From Colorado Springs, Schnugg flew to Belgrade, Yugoslavia, to prepare for next week's Tungsram Cup tournament in Hungary. By telephone yesterday, Schnugg said the decision to boycott "was pretty devastating. It's been tough here on our players. We've been sitting around in shock. The coaches have had to get on us for being so listless."

But last night, the U.S. team beat Yugoslavia 8-7 in a meaningful game and Schnugg says next week's tournament -- against Hungary, Yugoslavia, Italy, Germany and Romania -- will be the American's last chance to show "we can be the best."

The dream dies hard. Peter Schnugg is steamed that it has to die not of its own hand, but at the hands of politicians. The administration would paint the would-have-been Olympians as heroes of principle. The administration should strike a medal and have a dinner. But right now, Peter Schnugg wants nothing to do with such pyrrhic glory.

"I don't feel like a hero the way I voted," he said. "I don't want to go to the White House, and I don't want to parade down Broadway. I'll be happy to go to Colorado Springs and receive our uniforms, or whatever, and take part in any fund-raising they want to do.

"But I don't want to go to the White House. I don't want to have to shake the president's hand. I don't want to stand on the White House steps and have him give me a hug. Maybe I'll cool off in a month, but right now . . ."