What was going on when I was born?

Airline passengers began paying a higher Federal tax on tickets today in line with legislation passed 12 days ago but as yet unsigned by the President. ''It seemed clear to our lawyers that the tax increase was the intent of Congress, and since there was no reason to believe the President would not sign the tax bill, we ordered the collection of the tax,'' said Ellen Murphy, a spokesman for the Internal Revenue Service. William Jackman, a spokesman for the Air Transport Association, said the airlines' lawyers read the law the same way, so none of the carriers raised objections to the tax increase.

In his appeal for a new effort to solve the Israeli-Arab dispute, President Reagan moved from the role of a mediator to that of a full participant in the negotations, laying out by far the most detailed formula for a settlement offered so far by the United States. A senior State Department official said tonight that there were great risks in such a course. But he said the risk of angry repudiation by one or more of the principal parties was offset by the risk that Middle Eastern nations might have misrepresented the American position without such a declaration. A Categorical Vision President Reagan, apparently guided by Secretary of State George P. Shultz, was far more categorical than any other President in describing an American vision of how to settle the Palestinian problem.

Treasury Secretary Donald T. Regan said today that the Administration would sharply reduce the scope of sanctions it had applied against two French companies that shipped equipment to the Soviet Union for its natural gas pipeline to Western Europe. In what would be a substantial easing of penalties imposed by the United States for indirect export of its technology, the sanctions would affect only oil and gas equipment and would no longer bar corporate violators from receiving any United States products. In their ''original pristine form,'' Mr. Regan said at a briefing, the sanctions ''were a little too sweeping without giving the precise definition of what was meant.'' He said the modification he and other Administration officials had urged on President Reagan was not a relaxation but ''a clarification.''

Salvatore Odierno, the chief suspect in the slaying of Nathan Masselli, a Federal informant, was picked out of a police lineup yesterday by a witness to the slaying, law-enforcement officials disclosed. Officials said the witness had identified the 67-year-old Mr. Odierno as one of three men who fled from the scene of the slaying near Van Cortlandt Park in the Bronx on Aug. 25. Mr. Masselli, who was 31 years old, was shot in the back of the head as he sat at the wheel of his car. The victim and his father, William P. Masselli, 55, a purported mobster, had both been questioned by Leon Silverman, a special Federal prosecutor, in his investigation of allegations that Labor Secretary Raymond J. Donovan had dealings with figures in organized crime. Nathan Masselli had also been cooperating with Mr. Silverman as an undercover informant and had carrried a hidden tape recorder, according to law-enforcement officials.

It sometimes seems that Long Islanders have three things in common - a belief that anyone who moves to Manhattan is enormously wealthy or short of common sense, a suspicion of local officials who want to raise property taxes and a sure knowledge that no force can improve conditions on the Long Island Expressway. The L.I.E., as it is called, is a road paved in vitriol. ''The worst highway in the world,'' said a traveling salesman. ''A chore, a bore,'' said a vacationer returning from Shelter Island. State transportation officials -who are designing a $130 million improvement campaign for the expressway and plan to start the work in 1984 - say the road's reputation is unwarranted. They point out that it is not the most dangerous or heavily traveled of highways, and not the mo*Z-lodorous or unsightly either.

President Reagan, calling for a ''fresh start'' in the Middle East peace process, tonight endorsed ''full autonomy'' under some form of Jordanian supervision for Palestinians living in the Israeli-occupied West Bank and Gaza Strip. The President, in a televised speech on the day that the Palestinian withdrawal from west Beirut was completed, also demanded a ''settlement freeze by Israel'' that would preclude further Jewish settlement in the occupied areas. Mr. Reagan spoke of such a freeze as essential to what he described as a new United States prescription for peace in the Middle East. He also called for negotiations to bring about an ''undivided'' Jerusalem. Israel, under authority disputed by the United States and Arab nations, now controls both Jewish West Jerusalem and Arab East Jerusalem. Emphasis on 'New Realism' The President interrupted his vacation at his ranch near here to travel to the KNBC-TV studios in Burbank to deliver a speech that he characterized as marking a more aggressive Administration attitude toward Middle East peace negotiations.

Israeli officials reacted angrily today to a letter from President Reagan that was reported to have asked for a freeze on Jewish settlement in the occupied West Bank and Gaza Strip and to have suggested that the territories ultimately be linked in confederation with Jordan. In the letter, which was received Tuesday night by Prime Minister Menachem Begin, Mr. Reagan was also said to have explicitly urged Israel not to annex the occupied areas. The Reagan message was reportedly part of a broad proposal on the next phase of negotiations under the Camp David accords, which form the framework for the Israeli-Egyptian peace process. Apparently the President's intention was to forestall any Israeli absorption of the West Bank and Gaza after the Palestine Liberation Organization's military defeat in Lebanon, and to leave open the prospect of a territorial compromise involving the occupied areas.

President Jose Lopez Portillo announced today that private banks would be nationalized to end the ''looting'' of Mexico through the flight of capital. In his final State of the Union address, three months before leaving office, he also said that exchange controls would be imposed and that banks would remain closed until Monday while the Bank of Mexico assumes control. (Bankers in the United States hailed the nationalization, saying it was needed to save the private banks from insolvency. Page D6.)

France's Socialist Government today conceded the failure of its attempt to spend its way out of the world recession: It introduced a cautious 1983 budget that puts the emphasis on controlling public expenditures, fighting inflation and staving off a third devaluation of the franc. France's rapidly widening budget deficit is to be reined in with sharp curbs on the growth of public spending, although generous increases in Government finance for industrial research and investment are foreseen. As expected, the well-to-do face higher income taxes, but the Socialists have slightly softened the new wealth tax. While describing the new $126 billion budget as ''selective'' and ''taking account of the international crisis,'' the Cabinet communique said the document was also designed to fight unemployment and inflation.

Congressional leaders of both parties unanimously predicted today that President Reagan's veto of a $14.1 billion supplemental appropriation bill would be sustained when Congress reconvenes next week. The consensus was that the President retained enough support in the Congress and the nation to block a two-thirds vote of both houses needed to override the veto. If the veto is upheld, Congress will begin work on a substitute bill more acceptable to the White House, the leaders said. Administration officials said that despite the veto there would be no layoffs of Federal workers or reductions in Government services until mid-September and that a new supplemental spending bill was likely to be approved by then. Democratic Congressional leaders saw the President's veto as a politically inspired effort to mend fences with Congressional conservatives, who were alienated from the White House last month in the course of their vigorous but futile effort to defeat Mr. Reagan's proposed $98.3 billion tax increase. The Democrats also regarded the veto as a threat to the Congressional prerogative to set spending priorities.

''Tonight I am calling for a fresh start. This is the moment for all those directly concerned to get involved -or lend their support - to a workable basis for peace.

FOR years, one of the most available types of Manhattan apartment was the one-bedroom rental in a postwar high-rise. Though boxy in shape and predictable in layout, their crisp white walls and modern appliances were well suited to one or two people. Those conventional one-bedroom apartments no longer have enough space to meet the changing needs of many tenants, but today's shortage of rentals often means staying put and making do. Some of these older apartments are now housing three or more people; others may have a single tenant who is using the apartment as both home and office. In either case, the storage and closet space is no longer sufficient, and buying a sofa bed or installing bookshelves is not enough to solve the problem.