What was going on when I was born?

Securities firms that sell tax-exempt notes and bonds issued by states and municipalities are worried that this market is being threatened by a flood of tax-exempt securities that are really thinly disguised borrowings of private corporations. ''It's a finite market that is faced with infinite demands'' if something is not done, said Ray Tauber, vice president at the Morgan Guaranty Trust Company. ''Small banks around the country are not buying general obligation bonds because they are full of the industrial development issues,'' he continued. Industrial development issues are tax-exempt bonds sold by a local government authority on behalf of a private company that is responsible for repaying the bonds. Such bonds were originally sold to finance industrial development, but lately the uses for the bonds have spread to include office buildings and amusement parks.

A photograph accompanying an ar- ticle on New York State Assembly redistricting in the main section of yesterday's Times was identified as Assemblywoman Rhoda S. Jacobs. It was actually Assemblywoman Gail S. Shaffer.

After more than a decade of steady increases, prices of homes in the United States have begun to level off, and in many areas they have begun to decline. After adjustment for inflation and financing discounts, the average price of existing homes has fallen 10 percent in the last 12 months, the steepest drop since the Depression. To be sure, the recent decline in the inflation-adjusted price of homes is insignificant compared with the substantial appreciation many homeowners have built up during the last decade, when average prices virtually tripled. Nonetheless, this sudden price erosion has brought into question the future investment value of homes and the role of home ownership in the American family's financial planning. Although real estate experts believe housing will still be a safe long-term investment, they say it may no longer be the instrument for savings and speculation that it was in the past. People will have to learn to seek protection from inflation through a wide range of financial assets other than their homes.

The Giants lost in overtime today in a game they appeared to have won in the final minute of regulation time. They also lost their quarterback, Phil Simms, probably for the season, with a separated right shoulder. The Washington Redskins beat them, 30-27, on Mark Moseley's 48-yard field goal. Moseley had tied the score at 27-27 on a 49-yard field goal on the last play of regulation, a play made possible by the Giants' questionable decision to try a low, short kickoff. Only 45 seconds before the field goal, the Giants had apparently turned defeat into victory on a 27-yard touchdown pass from Scott Brunner, Simms's successor, to John Mistler.

A flood of tax-exempt industrial development bond issues worries securities firms that deal in tax-exempt bonds and notes issued by municipalities and states. They feel say some tax-exempts are actually disguised borrowings by private corporations. (Page D1.)

Despite a widely noted deterioration of subway and bus service in New York City, municipal researchers have found that since 1970 the work force and spending power of the Transit Authority, alone among major services, have actually increased. The researchers, who compared the budgets, work forces and levels of service provided by various agencies, also found that since 1975, the money available for transit was cut less severely than for the other major services - police, fire, education and sanitation. ''They cut transit hardly at all, and it's the only service that went to hell.'' said one of the researchers, Raymond D. Horton, executive director of the Citizens Budget Commission and an associate professor at Columbia University's Graduate School of Business. The researchers concluded, in fact, that other major services had held up better than might have been expected under retrenchment. Employees left behind after reductions in the work force tended to work more efficiently in an effort to keep up with a workload that had been handled by much larger staffs, the researchers said.

Supply-side economists who advocated the big tax cuts that have formed the basis of President Reagan's economic policy are rallying to defend their ideas against those who say that David A. Stockman has effectively discredited them. In the process, they are seeking to put distance between themselves and Mr. Stockman, director of the Office of Management and Budget and a former close ally whom they now regard as a virtual renegade. ''He slowly turned himself into an opponent,'' said Jude Wanniski, a consultant and leading supply-side exponent, in the wake of the publication last week of unguarded conversations in which Mr. Stockman expressed strong doubts that the program would succeed. Some irrepressible supply-side theorists insist that the budget chief's admissions neither discredit their position nor politically undermine the President's program, despite assertions of damage by such Republicans as Senate Majority Leader Howard H. Baker Jr.

Report sees gross deficiences in global nuclear safeguards A2 U.S. commander urges review of advisers' role in Salvador A2 Uprising of 1973 is marked in Athens A4 Around the World A5 Acting President piles up big lead in Bangladesh election A7 Uzbeks are demanding a bigger piece of the Soviet pie A8 Soviet republic of Moldavia toasts a vintage harvest A8 Thousands disrupt traffic in Frankfurt airport protest A10 Trudeau and Levesque trade insults A12 Government/Politics Miami Beach installs TV cameras to discourage criminals A17 Group in Jersey seeking voter intimidation evidence B1 Supporters of George Wallace urge him to run for Governor B10 Efforts are being pressed in Congress to pass an antibusing bill B17 Reagan flys back to Washington aboard command center B17 More than 900 publications will be dropped to save money B17 Washington Talk Briefing A20 Reagan's pollster keeps his finger on nation's pulse A20 A new breed emerges in capital: political husbands A20 General Around the Nation A14 Manslaughter trial further divides two Massachusetts towns A14 Brooklyn's Red Hook section undergoes renaissance B1 Link is sought between Brooklyn murders and fraud scheme B6 Outside employment of college teachers raises questions B11 Excerpts from interview with Lane Kirkland of A.F.L.-C.I.O. B12 SportsMonday Basketball: Knicks lose on another second-half collapse C3 Boxing: Alexis Arguello is wandering into history C1 Columns: Dave Anderson on Jets' front four C7 Red Smith on the classic lame-back excuse C4 Features: Sports World Specials C2 Question Box C11 Football: Jets beat Patriots, 17-6 C1 Redskins defeat Giants, 30-27, in overtime C1 Bengals beat Rams, 24-10, for eighth victory C6 Victory in finale would sent Washington State to Rose Bowl C9 Hockey: Flyers' rally beats Islanders, 5-4 C3 Gretzky, Fuhr and Oilers stop Rangers, 5-3, at Garden C1 Sabres turn back Bruins, 3-1, in Buffalo C3 Horse Racing: Snow Plow wins Demoiselle at Aqueduct C5 Outdoors: In pursuit of striped bass C11 Statistics C10 Tennis: Connors loses first two sets but beats McEnroe C11 Health/Science Rough seas hinder recovery of space shuttle's booster rockets A19 Human fetus removed from womb for successful surgery B15 Energy Home heating oil price rises despite plentiful supply B3 Style Relationships: Singular torment of envy B16 The "myth" of mother love is challenged B16 Getting to the top in fashion and beauty industries B16 Beverly Hills Diet is criticized B16 Arts/Entertainment Blacks' history in Pennsylvania illuminated in exhibit A14 Diane Trilling explores link between morality and style C13 "Kleber Flight" and "Last Scam," novels, reviewed C16 Richard Harris opens in "Camelot" at Winter Garden C16 "Goliath Awaits," TV film about lost submarine, on WPIX C19 "Looking Back," a life of Edith Wharton, on Channel 13 C20 Obituaries Enid Markey, played Jane in first Tarzan movie B18 Charles C. Parlin, lawyer and church leader B18 Features/Notes Notes on People B5 Man in the News: Paul William (Bear) Bryant C9 Going Out Guide C15 News Analysis David K. Shipler on Israel's reaction to the Saudi peace plan A1 Ari L. Goldman on Koch's transit improvement plan B2 Editorials/Letters/Op-Ed Editorials A22 Pure science and pure profit Foxes for the chicken coops Trials of juvenile justice Letters A22 Flora Lewis: ominous silence on a noisy submarine A23 Anthony Lewis: does the emperor know? A23 Nick Eberstadt: the poor? who are they? A23 Vernon E. Jordan Jr.: diluting voting rights A23

The guessing game surrounding the peace plan of Saudi Arabia's Crown Prince Fahd -would he or would he not recognize Israel? - has been generating considerable impatience here, mainly because Israelis think they know the answer very well. Optimism comes hard to a country besieged, vilified and repeatedly attacked by hostile neighbors over the decades. The impulse is to hear the Arab voices of extremism and to dismiss those of moderation, to see radicalism as reality and conciliation as duplicity. Arab affairs experts in Israel, fluent in Arabic and skilled at sifting through nuances in published and broadcast material from Middle Eastern capitals, develop a sixth sense like that of the veteran Kremlinologist who spends a lifetime dissecting Pravda. The Israelis know - they simply know - that they understand the Arab world more completely than do Americans and Western Europeans.

All $15.4 million in Federal funds for New York State parks has been eliminated as part of the Reagan Administration's budget cuts, according to the State Parks and Recreation Commissioner. ''What is the degree of the cut?'' said the Commissioner, Orin Lehman. ''It isn't 30 percent, it isn't 50 percent. It's 100 percent.''

TUCSON, Ariz. THE police officers arrived while Alexis Arguello was cooling off in the center of the ring. The world lightweight champion was wearing the striped robe that made him look like a hooded Bedouin, a modern wanderer, when the officers came through the door. Take everything down, they ordered. The punching bags, the corner pads, the weights. The gym was reserved for Police Athletic League amateurs, not the champion of the world. Everybody out on the street. No time for showers. Out. From the moment the first explanations were made, it was apparent that Arguello's camp had been lured to this gym in Tucson by false promises from a local coach, that they had not realized professionals were not allowed in this police gym. But the officers were not interested in explanations, and they did not believe in the courtesy of a warning. Out, right now, they ordered. The sweat was still pouring down Arguello's face as he sat in the front seat of his car, next to his trainer and friend, Oscar (Don Kahn) Seary. In the back seat was Eddie Futch, the wise old trainer who will handle the corner on Saturday when Arguello defends his title against Roberto Elizondo in Las Vegas, Nev. Arguello is one of the most mature and intelligent of boxers, yet even his heathy psyche needed a bit of stroking after the rude enforcement of the law.

''It sure did disappoint us because we were just beginning to get the hang of it.'' - Capt. Richard H. Truly, whose space shuttle mission was cut short. (A1:4.)