What was going on when I was born?

International Israel's new Defense Minister is to be Moshe Arens, the Ambassador to the United States, who, like the outgoing Defense Minister, Ariel Sharon, holds hard-line views on key aspects of Israeli policy. Mr. Arens's appointment, announced by Prime Minister Menachem Begin's office, is expected to be approved by the Cabinet and Parliament. (Page A1, Column 6.) The small Persian Gulf states are increasingly concerned over falling oil prices. For the first time since the big price spurt in 1974, the conservative, pro-Western rulers of Kuwait and the other vulnerable oil-producing countries are learning that they can no longer count on constantly rising revenue to buy domestic peace. (A1:5-6.)

''Internal developments in Israel do not have - and will not have - any impact on the process of peace in the Middle East.'' - Menachem Begin. (A8:1.)

Some homeowners may be hit with an unexpected tax liability this year. When interest rates were rising, many banks offered to buy back low-interest mortgages from their customers at a substantial discount. The difference between the outstanding mortgage and the amount paid to cancel the debt could be considerable - and it is taxable income. ''When the banks came around and said, 'You have outstanding a $60,000 mortagage at 5 percent, but if you give me $40,000, I'll consider it paid off,' most people didn't realize they would be taxed on the difference,'' said Gail Winawer of Oppenheim, Appel, Dixon & Company, an accounting firm. ''But that's $20,000 of taxable ordinary income.'' Home ownership usually creates a tax liability only when a dwelling is sold for more money than it cost. With planning, though, it is often possible to defer taxes on such capital gains. If you are buying or building a new home that costs at least as much as the sales price of the house you are leaving, the entire gain can be deferred until the new home is sold. But this deferment - or rollover, as it is often called - is lost if the new residence is not bought and occupied within 24 months of the sale of the old residence.

Congressional Democrats said today that they would accept a $4.3 billion emergency jobs bill proposed by the White House as a starting point in dealing with unemployment. But they said they would try to add about $1 billion to the measure. The Democrats said that the emergency package was only ''phase one'' of their efforts to deal with high unemployment and that they would propose other initiatives in future months. ''We don't think it goes far enough,'' Representative Thomas S. Foley of Washington, the Democratic whip, said of the White House plan. ''The Democrats accept it as the first phase, not as the final and complete resolution of the human needs that exist in society.''

There seems little doubt now that the Washington Public Power Supply System will be unable to meet a $15.7 million monthly interest payment to the Chemical Bank on March 31, credit market analysts agree. At that point, the nation's largest issuer of tax-exempt bonds would lapse into technical default on $7 billion of principal and interest on bonds issued for two abandoned nuclear power plants. What is not clear, and nowhere near resolution, is how deeply its suppliers, bondholders and Wall Street municipal bond underwriters will suffer if one or more of them force the supply system into default. Although a few 11th-hour efforts are under way to avert a default, many analysts say it is highly likely to occur before the end of this year. ''People have misperceived the severity of the problem for too long,'' said Eileen Titmuss, a bond analyst with Drexel Burnham Lambert Inc. ''The search for a last-minute solution will be very problematic, if not impossible.''

Former State Senator Vander L. Beatty of Brooklyn was indicted yesterday on forgery and other charges stemming from his unsuccessful attempt to win a 1982 Congressional primary. He was accused in the state indictment of having instructed political aides to put false signatures of voters on voterregistration cards while he and the aides were in the Brooklyn office of the city's Board of Elections some time in October. In addition to the forgery charge, Mr. Beatty was indicted on charges of criminal conspiracy and election-law violations. According to the Brooklyn District Attorney, Elizabeth Holtzman, who announced the indictment, Mr. Beatty and his associates were involved in a post-primary effort to create ''irregularities'' that would lead a court to throw out the results of the primary and order new balloting.

Falling world oil prices are sending tremors of apprehension through this tiny state at the head of the Persian Gulf. Kuwait's alarm is shared to varying degrees by all the other small oil exporters along the Gulf, from Bahrain down through Qatar and the United Arab Emirates to Oman. For the first time since the big price explosion in 1974, the conservative, pro-Western rulers of these vulnerable Arab nations are learning that they can no longer count on constantly rising revenue to buy social peace at home. The Nation's Riches Kuwait, like the other states, remains wealthy, with huge assets and few people to support. Its population of 1.4 million is sitting on 10 percent of the world's known oil reserves, and the Government has $70 billion to $100 billion invested overseas.

TORONTO WHEN Tommy Douglas was a boy, a Winnipeg doctor told him that he was suffering from a bone disease called osteomyelitis and that his leg would have to be cut off. Only because a brilliant young orthopedic surgeon decided to use the young charity patient for a teaching demonstration was he lucky enough to avoid the amputation. ''Had I been a rich man's son,'' Mr. Douglas says, ''the services of the finest surgeons would have been available. As an iron molder's boy, I almost had my leg amputated before chance intervened and a specialist cured me without thought of a fee.'' Mr. Douglas grew up to become the Premier of Saskatchewan, head of one of the first socialist governments in North America. In 1962, his party established a comprehensive medical insurance system, providing, in his words, ''complete medical care without a price tag.'' By 1971, such a system, administered by individual provinces and financed partly by the Federal Government, had been extended to cover every Canadian. But now this comprehensive medical insurance system - which provides health care at substantially lower cost than the American system and has been closely watched by United States policy makers as a possible model for imitation - is confronted by wrenching pressures. The Canadian medical system lies somewhere between the American entrepreneurial approach and British nationalization.

Emerging from a snowbound weekend, New Yorkers and residents of the metropolitan suburbs trooped to work with scattered delays but relative ease yesterday on crowded, snow-cleared highways and on subways, buses and commuter trains that had standing room only. Heeding warnings of traffic officials, who envisioned giant tieups, a third of the motorists who normally drive to work switched to public transportation and left home early. The results were heavy loads and some delays on rail and transit lines, a steady flow of cars on major arteries and a near normal day of commuting for millions of people. In the suburbs, some schools were closed, a few grocery stores had dwindling supplies, and many smaller roads and side streets were still blocked by snow and stalled cars. But there were no reports of unusual hardship, and scenes of sledding and snowball fights provided some light brushstrokes on the wintry countryside canvas.

G.M. and Toyota have agreed to produce a subcompact car jointly in the U.S. For G.M., seeking help from an outside manufacturer marks a turning point. Analysts viewed the agreement as a concession to Japan's reputation for superior quality and low-cost production. (Page A1.) For innovative Toyota, the joint venture is a relatively low-cost, low-risk way to start producing in the U.S. (D5.) Bank regulators should exercise greater supervision over foreign lending, Treasury Secretary Donald T. Regan told a Senate panel. The Secretary was testifying in behalf of a plan to increase American support of the I.M.F.'s lending resources. Mr. Regan said the American contribution would create jobs in the U.S.(D9.)

It could be said, without getting personal about it, that this was a grim little group standing in an ice-splotched parking lot, bouncing up and down in the northwest winds to generate some degree of warmth. As their feet moved, their noses ran, and occasionally one of them would trumpet through a tissue what seemed a protestation of man's condition at this time of year. These were eight of an estimated 30 million Americans now suffering from the common cold. ''I can't breathe,'' complained one in nasal tones. ''My head feels like it weighs a thousand pounds,'' complained another. ''I'm so tired, and I ache all over,'' whined a third. ''My nose is raw from blowing it so much, and it gives me the worst headache. Life isn't worth living when you have a cold.''

Because of an editing error, a news analysis article yesterday misstated the provisions of ethics code amendments adopted by the American Bar Association.