THE KINSEY INSTITUTE NEW REPORT ON SEX: What You Must Know to Be Sexually Literate By June M. Reinisch with Ruth Beasley, edited and compiled by Debra Hunt (St. Martin's Press: $22.95, illustrated; 540 pp.). Forty years ago, Dr. Alfred Kinsey surprised America by revealing that its citizens were (official and religious posturing aside) doing exactly what banned writers like Henry Miller described. Now that we live in an era of erotic Angst (Will sex kill me?), it seemed to Dr. June M. Reinisch, director of the Kinsey Institute, that it was again time to take America's sexual pulse. The resultant book is just as startling as Kinsey's original study, but far more depressing. Reinisch decided not to find out what Americans do in bed but rather what they know about it. The answer: not much. The solution to our sexual problems is obviously education, but as long as an organized segment of the population wants those who have sex to be punished for it, the state--unable to teach its citizens about their own constitution or world geography--also is incapable of informing them about the functioning of their bodies.