DEMOCRATS, still smarting from their 1988 defeat by George Bush, are entering the 1992 presidential campaign season in a feisty mood.Although the president's popularity ratings are sky-high, putative Democratic candidates such as Sen. Al Gore of Tennessee and Sen. Tom Harkin of Iowa are vigorously attacking Mr. Bush's record. The president, who has focused on foreign policy, is accused of almost completely ignoring Americans' needs at home. Health-care problems are mounting, middle-class incomes are falling, and education funds are being cut despite growing international competition, Democrats charge. Democrats say they sense opportunity. "All the polling and information I have seen persuade me that George Bush's popularity is paper-thin - that he can be defeated," says House majority leader Richard Gephardt (D) of Missouri. Celinda Lake, a Democratic pollster, says: "Democrats have an enormous opportunity to take advantage of their appeal to the middle class on the politics of living - like education, the environment, health care - and the role of government in their lives." So far, only one Democrat, former Massachusetts Sen. Paul Tsongas, is officially in the race. But at least a half dozen other Democrats are talking like presidential candidates: Senator Gore, Senator Harkin, Sen. John D. Rockefeller IV of West Virginia, Gov. L. Douglas Wilder of Virginia, the Rev. Jesse Jackson, and Gov. Bill Clinton of Arkansas. None of them is pulling his punches. They claim Bush is a Goliath ready for a fall. "President Bush is not providing the kind of leadership our country needs," Senator Gore told about 40 reporters at a recent breakfast meeting here in Washington. "Middle-income families are worse off today than they were in the 1960s." Surprisingly, Democrats are not hesitating to attack Bush on foreign policy, including the Persian Gulf war, even though that is considered his strong suit. Senator Harkin, who also breakfasted with reporters, charged that Bush's mishandling of Iraqi President Saddam Hussein helped trigger the Gulf war. "When [Saddam] indicated he was going to invade Kuwait, we didn't do a darn thing," Harkin says. "When he started making moves, we should have been there with aircraft carriers and military support and said, 'You take one step and that's it.' I don't think he'd have ever done it. And I think George Bush has got to be held accountable for all of the events that led up to that." Gore was even more biting. "At the same time President Bush sent his emissaries to toast the butchers of Tiananmen Square, he was sending other emissaries to kiss the hand of Saddam Hussein and pretend that he was going to be our buddy," the senator charges. Yet Democrats are most tantalized by domestic issues. "Concerns about foreign policy have declined," says Frank Greer, a Democratic media consultant. Voters "are much more concerned about America's economic strength and about whether we're going to be able to provide good jobs and an improving standard of living and education and skills training for our work force." A survey released last week by a bipartisan polling team, Tarrance & Associates (Republicans) and Greenberg-Lake: The Analysis Group Inc. (Democrats) found that the No. 1 concern among Americans today are so-called "lifestyle" issues: drugs, crime, education, environment, health care, homelessness. Economic concerns, which are often closely linked to issues like education, ranked a close second. Voters told the pollsters that they trusted Bush and the Republicans more than the Democrats on defense, taxes, and the economy. But on the fastest growing issues, like health care, the environment, and education, Democrats have the edge. Senator Rockefeller is testing some of these themes for a possible presidential bid in battleground states like New Hampshire. In a recent speech, he derided claims that Bush cares about education. "Half a million children drop out of school every year," the senator noted. "Too often, those who do graduate can't read or add well enough to get a job. Half of them have tried illegal drugs. More than half drink." "For the last decade, the political air has been clouded with slogans and buzzwords about 'family values that concealed a sad reality: Life has been getting worse for our children and their families. And we have done almost nothing," he charged. Democrats worry, however, that Bush will again run a "Willie Horton"-style campaign that injects what they call "diversionary" issues like racial fear, quotas, and flag-burning into the election. But Harkin says he'll hit back hard. Recalling the Horton ad in 1988, Harkin says at the time he urged Democratic nominee Michael Dukakis to counterpunch. Harkin advised Governor Dukakis to run a TV spot showing a Ukrainian seaman, Myroslav Medvid, escaping from a Soviet freighter in New Orleans in 1985, and then showing US officials handing him back to the Soviets. Harkin would have closed the ad with these words: "Reagan and Bush sent him back to the communist Soviet Union. If Mike Dukakis is president, and people want freedom and democracy, they're going to get it."