BY every measure in the publishing industry, American children appear to be reading more books than ever before. Sales of children's books now total $1 billion a year. More than 5,000 new children's titles are published annually. And some 400 specialized children's bookstores have sprung up around the country.But by every measure of the Educational Testing Service, children are still not reading enough. SAT scores continue to decline. Verbal scores stand at their lowest level ever. And SAT scores have dropped even for the best students - the very group whose parents might well have been prime customers for all those children's books. Buying books is only the first step, of course. Actually reading them is another matter. According to Diane Ravitch, deputy US education secretary, more than half of students questioned in recent studies said they were never read to when they were preschoolers. Perhaps that sad situation is improving for today's preschoolers, given the burgeoning interest in children's books. But considering the hours many children spend in nonparental care, and the multiple demands on working parents, children's reading may still be getting short shrift in many homes. President Bush recently assailed mindless and violent television programs as another factor contributing to declining educational standards. Even his own grandchildren, he admitted, sometimes "watch stuff that has no redeeming social value." In response, an elementary school teacher in Lewiston, Maine, Sandra Scribner, asked the president to endorse a suggestion that parents turn off TV for an hour each day. Even if parents choose not to take such a "radical" step, Ms. Scribner's idea serves as a useful reminder that children need help in carving out time for reading and homework. It has become a truism that lifelong reading habits start young. By reading to preschoolers and encouraging older children to read to themselves, parents can draw on the rich resources of children's literature, enriching children's vocabulary and enlarging their world. In time, even SAT scores are bound to reflect that effort.