What was going on when I was born?

Leaders of the United Steelworkers of America, in a surprise action, today rejected an industry proposal to replace the present contract with a new one. The steel companies had said a new contract was mandatory if their labor costs were to be made competitive and the industry was to be revived. The existing contract is now likely to stand until next year, union officials said. They said the industry's three-year proposal would have frozen direct wages and eliminated cost-of-living increases for the first year and would have placed a 50-cent ceiling on cost-of-living increases in each of the next two years. It was unanimously rejected by about 400 presidents of union locals at a 40-minute meeting here.

Israeli forces attacked Palestinian neighborhoods and artillery positions in west Beirut from the land, sea and air today. Philip C. Habib, the special United States envoy to the Middle East, arranged for a new cease-fire to begin at 9 P.M. Lebanese time (3 P.M. New York time). Today's attacks began hours after the Palestine Liberation Organization presented Lebanon's Prime Minister, Shafik al-Wazzan, with a detailed plan for the withdrawal of P.L.O. guerrillas from the besieged capital.

The New Jersey Commission of Investigation urged the Legislature today to delay passage of bills appropriating more than $100 million for local sewer projects. The commission said the funds should be withheld until legislation could be enacted to insure that the money ''won't be squandered or stolen.'' The move came at the close of four days of public hearings into the operation of local sewerage and utility authorities, and some witnesses told of mismanagement and corruption in several authorities. The commission said it would have specific recommendations for the Legislature within 60 days to help enforce greater financial oversight.

Comparative figures gathered for the first time by the Board of Education show that reading scores are higher in the New York City Public Schools than in all but one of seven other big cities known to use the same standarized test. New York is also one of only two of the cities in which the majority of the elementary and junior high pupils are reading above the national average, according to statistics compiled by the school system's Division of Curriculum and Instruction. ''This makes us feel relatively sanguine about what we are doing,'' said Charlotte Frank, executive director of the curriculum division. The cities with which New York City compared itself are Atlanta, Baltimore, Detroit, Memphis, Omaha, Pittsburgh and St. Louis. Officials here said these were the only large cities found to use the California Achievement Test. Direct comparisons with many other cities are difficult because of different testing.

The Federal Reserve Board yesterday reduced to 11 percent the rate it charges on loans to banks and other financial institutions. The reduction, from a rate of 11 1/2 percent, gave new impetus to recent declines in interest rates and prompted analysts to predict further declines in coming weeks. ''The Fed is anxious to do its part in bringing interest rates down,'' said Maury Harris, an economist at Paine Webber Inc, a securities firm. ''This is a good sign for the economy, which needs lower rates for healthy growth.''

Lebanon's Prime Minister today sent Philip C. Habib, the special United States envoy, a detailed plan by the Palestine Liberation Organization for the withdrawal of its 6,000 guerrillas trapped in west Beirut. The development came on a day of new Israeli shelling and bombing attacks on Palestinian targets in the city. The P.L.O. proposal, delivered by Prime Minister Shafik al-Wazzan, was noteworthy because it did not contain an earlier P.L.O. demand for a continued military presence in Lebanon or for major political concessions from the United States or the United Nations on the issue of Palestinian self-determination. Palestinian officials said the plan called for the guerrillas to leave Lebanon by land over a one-month period and to be ''redeployed'' in Syria, Jordan and Egypt, which they said had agreed conditionally to take in some of the fighters.

A Federal jury found today that The Washington Post Company had libeled the president of the Mobil Oil Corporation and assessed the newspaper $2.05 million in damages. William P. Tavoulareas, the Mobil president, and his son, Peter, had sued The Post for $50 million, asserting that the newspaper had damaged their reputations by knowingly or recklessly printing two false articles in late 1979. Punitive Damages Assessed The jury awarded William Tavoulareas $250,000 in compensatory damages and $1.8 million in punitive damages based on the first of the two articles, in which The Post alleged that Mr. Tavoulareas had used Mobil's money and his influence to ''set up his son'' in the shipping business and to enrich him with millions of dollars in Mobil contracts. The jury ruled that the second article was not libelous. Reaction to the jury's decision was mixed. Some newspaper officials said it could inhibit vigorous reporting and other experts said it would encourage accuracy. (Page 8.)

Gray dust from the nearby Galunggung volcano lies inches thick on the terraced rice paddies around this village of 8 houses and 60 people. The weight of dust has broken the coconut fronds. It has killed the fish, turned the air into a choking, gritty fog and caused the 6,504-foot volcano, little more than a mile and a half away, to disappear from view. Since April 5, at least 15 eruptions of lava, pebbles, rocks, sand and dust have killed 20 people, sent 40,000 villagers fleeing, destroyed hundreds of brick and bamboo houses and, high over the mountain, clogged the engines of two jetliners, both of which managed to regain power after falling thousands of feet.

President Reagan met today with pro-Taiwan Senators and Congressmen to spell out an American compromise on arms for the Nationalist Government that includes a new arms deal for Taiwan and a pledge to Peking that future American arms deliveries to Taiwan will not exceed current levels, members of Congress disclosed. Participants said that in a classified briefing, the President and his aides said the Administration would notify Congress within two weeks of a new deal on F-5E fighters for Taiwan. Any further delay would interrupt the production schedule of those planes in Taiwan, and the President was quoted by participants as saying he would not let that happen. President Reagan also told the group that the State Department had sent Peking a letter asserting that future American arms deliveries to Taiwan would not go beyond current levels, either in quantity or quality, members of Congress disclosed.

With a major Communist Party congress scheduled for autumn, the Chinese leadership has been swinging the country back toward its old orthodoxy, with new constraints on foreign contacts and study abroad and a revival of ideological attacks on Western values. The sour mood developing over the last few months evokes the xenophobia that existed in China before Peking opened its doors to Western influences in the mid-1970's. Some diplomats are finding unofficial access to the Chinese people increasingly difficult. One European journalist with several tours in China calls the climate the tightest he has seen since before the death of Mao Zedong in 1976.

Bus and subway operators began a strike today, leaving 600,000 commuters without public transportation.

Around the World; South African Outlines Racial Rights Plan BLOEMFONTEIN, South Africa, July 30 (Reuters) - Prime Minister P.W. Botha disclosed today for the first time details of his plan to grant political rights to South Africa's 2.5 million people of mixed race and 800,000 Asians. Mr. Botha, in a speech to 3,000 members of his National Party at a convention, mentioned no political involvement for the country's majority black population.