CHRISTMAS WOULDN'T BE the same without the American Civil Liberties Union (ACLU, alias "The Grinch") waging its annual legal campaign to remove Nativity scenes or "creches" from Christmas displays. Numerous courtroom challenges and conflicting decisions have transformed the Establishment Clause of the First Amendment into a bewildering legal enigma. But the U.S. Supreme Court this year may substantially clarify the extent to which municipalities can promote the religious aspects of Christmas in the pending case of Lynch v Donnelly.

A week before Christmas in 1980, Daniel Donnelly filed suit against his city of Pawtucket, R.I., challenging the constitutionality of Nativity scenes on public property. U.S. District Judge Raymond Pettine declared the display unconstitutional, holding that "government may not assist in the fight to keep Christ in Christmas." The second part of the drama unfolded last November when a federal appeals court upheld Pettine's decision. Finally, with the aid of the U.S. Justice Department, Pawtucket further appealed the findings to the Supreme Court.

The plethora of confusing, contradictory lower court decisions on the separation of church and state have precluded any coherent interstate-supported busing for parochial students is constitutional; but somehow state funds for field trips are not. The purchase of somehow state funds for field tripos are not. The purchase of textbooks for parochial students is permissible; buying a film projector is not. Churches and religious schools are constitutionally tax exempt; tuition tax credits are not.

And even as Judge Pettine was ruling against Pawtucket, Federal Judge Jack Roberts permitted a Nativity scene in the Texas Capitol Rotunda, arguing that Christmas has emerged as a predominantly secular holiday. Moreover, in a similar lawsuit in Denver, U.S. District Judge David Winder ruled in favor of a creche, saying. "The message conveyed is not an endorsement by the City of Denver of the Christian faith but rather one of the general celebration of the holiday season."

AMIDST THIS DEBATE, strict civil libertarians seem conveniently to forget our nation's deep religious roots. The First Congress did not view the First Amendment and some federally funded religious activities as mutually exclusive. Indeed, James Madison supported the expenditure of $500 to fund public prayers in Congress--a practice which continues today.

Examples of our religious foundations abound. The national motto, "In God We Trust," is imprinted on all of our currency. We refer to God in our national anthem and in "America." President Reagan has proclaimed a Jewish Heritage Week as well as declaring 1983 the "Year of the Bible." The words "Anno Domini" (translated: "in the year of our Lord") or "A.D." have pervaded our time references, are chiseled into nearly every federal building, and are found in every Presidential document. And the most telling of all, we publicly continue to celebrate the birth and crucifixion of Jesus Christ in our two most important holidays--Christmas and Easter.

We cannot separate our present holiday celebrations from our historical legacy. To deny such roots is to disown the origin of our American culture. The Supreme Court wisely considered the arguments in deciding Marsh v. Chambers (1983). In Marsh, the Court permitted the Nebraska legislature to continue opening its sessions with a prayer from a state supported chaplain. The Court abandoned a strict constitutional analysis; instead, the Justices cited the substantial history of legislative chaplains and found no significant First Amendment violations.

In case of Pawtuckoi, Nativity scenes have been erected on public property for over 40 years. Such a firmly established history of secular and religious Christmas celebrations must at least mitigate potential church and state infringement. The Supreme Court may very well use its recent Marsh reasoning to affir the constitutionality of creche displays.

But aside from historical justification, Rex Lee, the solicitor general of the U.S., pointed out to the Court that if federal recognition of Christmas--an important Christian holiday--is reconcilable with the Establishment Clause, then the religious symbols attached to the holiday must also be constitutional. Moreover, Lee argued that lower court decisions opposing Nativity scenes were tantamount to "cultural censorship," discriminating on the content of speech.

IN THEIR ZEAL to stamp out every lingering vestige of America's religious roots, civil libertarians ignore the deeply ingrained cultural traditions that have marked the Christmas season. Hopefully, the Supreme Court will acknowledge such customs and rule in favor of Pawtucket. This is not to say, however, that Nativity scenes should be placed in every municipality. Constitutional permissibility does not imply good public policy.

Many non-Christians, especially Jewish Americans, find creches on public property offensive. After all, the Nativity scene underscores the theological division between Christianity and Judaism. And for atheists, the presence of the display might make them feel alienated from mainstream American life. These effects are accentuated for non-Christian children who, as the ACLU writes, "will question... [their] identification with American culture."

A community's right to observe a religious holiday in accordance with its long-standing religious, cultural, and secular traditions must be preserved. But in this season of good-will and gift-giving, localities with substantial non-Christian membership should consider foregoing a Nativity scene in a publicly funded display. There is certainly no shortage of alternative private sites for creches. The avoidance of a bitter community division must play the guiding principle. This is a lesson the ACLU surely needs to learn: Christmas this year in Pawtucket will miss much of the holiday spirit. The Grinch must be green with envy.