THE ill-housed and homeless of America must be confused by the urgency of the debate over guaranteeing $10 billion in loans to help house Soviet Jews in Israel. After all, our country's programs for developing housing for its own people are barely functioning, and Congress and the media show little concern.The Department of Housing and Urban Development (HUD) has gone through more than a decade of massive cuts. Even so, HUD Secretary Jack Kemp is not using his resources to the fullest, and the few new housing programs enacted by Congress in the 1980s are unfunded, unimplemented, or about to expire. As a result, the net supply of rental housing is actually declining, while the lines of families in need of low-cost housing keep getting longer. What's gone wrong with a national housing policy that once had the goal of providing a decent home for every American? Basically, housing policy has been on hold since the Reagan administration cut housing subsidies to the bone then got caught using what was left for political purposes. Influence-peddling at HUD was uncovered in 1989 by the HUD inspector general and press reports. Thanks to the involvement of big political names like James Watt, the news media pounced on the story and Congress rushed to hold hearings. It quickly passed the HUD Reform Act of 1989, which imposed strict oversight and review procedures (some desirable, some cumbersome) on members of the housing industry willing to do business with HUD. Mr. Kemp shut down the Sec. 8 rental assistance program, which had been the main source of scandal. He also closed down the Federal Housing Administration's (FHA) troubled co-insurance program, in which the government shared the risk on insuring loans for rental housing with private mortgage lenders. But Kemp has "cleaned up" HUD by modeling it after a Soviet bureaucracy that doesn't make mistakes because it doesn't do anything - at least relative to previous administrations. HUD has retreated into a siege mentality of bureaucratic caution bordering on paranoia. Housing advocates are concerned about the inactivity of the FHA. With the demise of the co-insurance program, the total amount of mortgages for new rental housing insured by the FHA has dropped dramatically from about $6 billion in 1987 to much less than $1 billion in 1988, 1989, and 1990. "It has become quite clear that, intentionally or unintentionally, HUD is shutting down its multifamily housing programs," said a recent memo circulating within the National Association of Home Builders. HUD has a new delegated processing program for insuring loans on rental housing, but industry officials say it is too complex and does not meet financing needs. Private financing for rental housing has dried up, largely because of the double whammy of a slumping real estate market and the congressional decision in 1986 to eliminate most of the tax benefits for investing in multifamily housing. Without the FHA to guarantee them, loans for rental housing are very hard to find, driving down rental-housing s tarts to their lowest level in years. Only about 154,000 rental units will be started in 1991, according to a projection by the newsletter Multifamily Investment Outlook. That's less, the projection says, than the number of units expected to be lost to fire, demolition, or conversion to ownership. The lack of financing may be tolerable for market-rate rentals, which were overbuilt in some areas. But it is also making it difficult to build low-income rentals and is blamed for low utilization of the federal tax credit for development of affordable rental housing. Meanwhile, hundreds of thousands of units of low-income housing built more than 20 years ago are continuing to deteriorate, thanks in part to HUD's inaction. Last year, Congress enacted a program to provide financial aid to help preserve housing. Unfortunately, the aid is not being provided because HUD has not issued rules for the program. Like Soviet bureaucrats, HUD officials seem unduly suspicious of the private sector. Department officials will not discuss any policy changes with industry groups, and the Office of Public Affairs seems more intent on withholding information than releasing it. CONGRESS should not escape blame. The Reform Act imposed miles of red tape to prevent political abuses that Congress had allowed in the past and could have prevented without new legislation or regulations. The pending fiscal 1992 appropriations bill will provide money for two new housing programs advocated by President Bush. But the low-income housing tax credit program will expire at the end of this year, and Congress is in no hurry to extend it. And the media have let housing programs slip off their ag enda once again. Now that the HUD scandals are over, reporters have been reassigned. Housing policy still doesn't merit much attention, and even homelessness has dropped off the front page. Perhaps loan guarantees for Soviet immigrants to Israel are a worthwhile cause, but with our domestic housing policy in total disarray, Congress should give at least equal priority to putting HUD back to work here at home.