As a result of the rallying effect of the Persian Gulf war, President Bush is riding high in the latest polls. He continues, however, to get pretty low marks from the public for his handling of domestic issues, especially the economy.

Only 45 percent of the respondents in the latest Washington Post/ABC News poll approve of the president's handling of the economy, showing even now the president hasn't recovered from the damage he suffered on the domestic front last fall when his budget negotiators threw away his commitment to fight new taxes.The man chiefly responsible for that debacle, budget director Richard Darman, has now come under fire as well for his general handling of his job.

A report by experts from several of Washington's conservative economic think-tanks documents his retreat from Reagan-era efforts to improve the management and efficiency of the federal bureaucracy.

Titled "Failing Marks: A Midterm Report on the Office of Management and Budget," the report, issued through Citizens Against Government Waste, offers the following conclusions:

- Under Darman, the Office of Management and Budget stopped tracking the implementation of the Grace Commission's 2,478 efficiency-enhancing, cost-saving recommendations; discontinued its annual report on wasteful spending by Congress; and eliminated the separate management report that enabled Congress, the president and the general public to monitor OMB's progress in identifying and eliminating waste.

- Darman truncated OMB's privatization program. Agency reviews to examine the feasibility of contracting out commercial services to the private sector have dropped from 14,900 employee positions in fiscal year 1988 to a current estimated 4,000.

- Darman acquiesced in the neutering of the Office of Information and Regulatory Affairs (OIRA), the OMB office responsible for reducing unnecessary paperwork burdens on American business.

- Darman's endorsement and use of a dishonest accounting method know as "current services baseline budgeting," combined with his support for higher taxes, unleashed a torrent of pork-barrel spending by Congress. Domestic discretionary spending will grow by $1.75 for every additional dollar collected in new taxes.

"Official Washington's failure to address the critical problem of waste, mismanagement and fiscal irresponsibility," the report said, "has become a national scandal.

Along with the unfocused domestic content of the president's State of the Union message, the reluctance to replace Darman suggests the president means to do nothing to rebuild his leadership reputation on the domestic front. His presidency and his political future now rest on the fortunes of war.

As he challenges us to meet the burdens of leadership abroad, the president would do well to remember the ultimate test of a democratic statesmen is still the domestic welfare of his people.