Inside Report (1)

The Democratic party is expected to endorse a sharp critique of Reagan's Central America policy.

A draft of a statement to be issued June 27 at the party's midterm meeting says that expansion of Soviet influence in Central America is unacceptable. But, it says, Reagan's ''single-minded pursuit of military solutions'' in the region ''increases polarization and breeds radical alternatives.'' In El Salvador, the Democrats will press for a political settlement through negotiations.

The Senate Democratic Policy Committee, meanwhile, issued a 237-page collection of papers it had commissioned on Latin America policy. These tend to support the conclusion that the White House has overemphasized the East-West factor in its approach to Central America.

In sum, the papers conclude that Reagan administration policy toward the region is based upon assumptions that are unrealistic and obsolete.