March 5, 1981

A campaign by the American Telephone and Telegraph Company for the right to expand into advanced fields of communications opened on a new front today. Bell asked a court in Newark to modify a 25-year-old consent decree that has confined A.T.& T. to the phone business. The Newark action, designed to modify a 1956 consent decree that keeps A.T.& T. from entering unregulated businesses, was disclosed in open court here by A.T.& T. lawyers at the trial of the phone company on antitrust charges brought by the Justice Department. The trial resumed today.

The Senate Agriculture Committee approved a temporary freeze on dairy price supports, giving President Reagan his first key Congressional victory in his bid to curb U.S. spending. (Page A1.) Secretary of Defense Caspar W. Weinberger said sharply increased military spending, as proposed by the Administration, would ''significantly and quickly strengthen our ability to respond to the Soviet threat at all levels.'' (A1.) But leaders of organized labor called the economic plan ''disastrous to working Americans.'' (B12.) Sales by the Big Three auto makers rose 22 percent in the last 10 days of February, spurred by the biggest rebate campaign in the industry's history. G.M. sales rose 15.4 percent and Chrysler's were up 47.3 percent. But Ford's declined 2 percent from the 1980 period, when the company had a rebate program in effect. (D1.)

AS far as most people are concerned, there are three ways to go about decorating a home: Get the best decorator money can buy; get a designer who will work within a moderate budget, or do it yourself. However, there is a fourth way many people never think about, and it may be one of the simplest: Go to a department store or furniture store and hire its design department. A look around the store will tell you if the furniture suits your taste, price tags tell you how much things cost and you won't be running to showrooms all over town. Department stores have yet another advantage for someone with a totally empty nest: shopping services that will work with the decorator - at no extra charge - to coordinate sheets, towels, china, glassware and just about anything else required to turn a house or an apartment into a home.

At International Harvester's annual meeting a few weeks ago, the Sisters of Charity of the Blessed Virgin tied up the proceedings by discussing the morality of the company's $66 million truck operation in South Africa. Shortly before that, Rockwell International and Emerson Electric were confronted by shareholders from the Dominican Order questioning production of nuclear weapons by the military contractors. Although the annual meeting season has barely begun, the religious activists who monitor corporate social responsibility are off to a rambunctious start. ''Some people try to red-bait us and accuse us of being anticapitalists, but we're not,'' said Arlene Woelfel, a feisty Franciscan nun who sports blue jeans and flannel shirts. ''We're just making sure corporations live up to their social contract.''

As recently as a year or so ago, supply-side economics was a subject for derision among mainstream economists. Now, with President Reagan as its champion, this newly articulated economic theory is both the basis of national economic policy and a topic of respectful attention in academic circles. The logic of the approach as Mr. Reagan sees it was detailed in his economic address to the nation last month. ''In the past we've tried to fight inflation one year and then when unemployment increased turn the next year to fighting unemployment with more deficit spending as a pump primer,'' he said. ''It hasn't worked. It's time to try something different and that's what we're going to do.'' Nonetheless, the supply-side theory's promises for a quick, noninflationarysolution to economic problems continue to arouse debate.

Governor Carey issued a detailed assault today on President Reagan's proposal to limit Medicaid funds allocated by the Federal Government to the states. The Governor charged that the President's plan was inconsistent with Mr. Reagan's stated commitment to help ''those who through no fault of their own depend on the rest of us.'' ''Our analysis of the Administration's proposed program indicates direct consequences for those most in need - the poor, the disabled and the elderly,'' Mr. Carey said. He noted that the President, in his budget address, had stated that the social programs on which the needy depended would be exempt from any cuts.

The Reagan Administration's military budget, coming on the heels of the big domestic budget cuts two weeks ago, signals a reversal of national priorities as basic and significant as did the Great Society programs of President Johnson in the mid-1960's. If the Administration has its way, its new military program will commit the nation to major long-term growth in Pentagon spending, just as the Johnson Great Society initiatives committed the nation to a huge buildup in domestic spending, long after Mr. Johnson had left the White House. The Reagan military budget represents an expansion of the Carter Administration's long-term effort to put the United States in a stronger position to deal militarily, if it wants, with global instability in trouble spots like the Persian Gulf, and it tacitly accepts that the threat of conventional war is greater there than in Europe. It goes beyond the Carter buildup of strategic forces with an expensive new manned bomber and a surge of naval growth. And, by emphasizing the need for a quick strategic spurt to match Soviet power, it contains the hint that the Reagan Administration believes that, in Winston Churchill's famous phrase, it must ''arm to parley'' with Moscow on arms control.

IN the past, bachelors were thought of in two ways. There were the sophisticated ones who created a legendary life style for themselves, complete with the perfectly appointed penthouse. And there were the solitary single men, who lived in makeshift quarters and never got around to replacing the card table, having the sofa reupholstered or redoing the kitchen. Those were the ones who rationalized that their personal situations would soon change and that's when they would start getting their places together. But a new type of bachelor seems to be emerging - a single or newly single man who is determined and decisive -for whom ambitious design decisions are a necessary priority.

New orders for factory goods fell threetenths of 1 percent in January, the Commerce Department reported today. It was the first decrease since last spring's recession, but had been predicted by economists for some time. Declining orders in the steel, automobile and shipbuilding industries contributed heavily to the overall decrease, with steel the biggest factor, the department said.

In the first key Congressional victory for President Reagan's program of Federal spending reductions, the Senate Agriculture Committee today overwhelmingly approved a proposal to freeze temporarily the level of dairy price supports. In a two-hour session that included long tributes to the President's economic recovery plan and the dairy industry, the committee voted, 14 to 2, with one member voting ''present,'' to eliminate an increase in milk price supports next month that would mean higher prices for milk, butter and cheese. The increase, which committee aides estimate would raise the price of a gallon of milk to consumers by about 7 1/2 cents, is to take effect April 1 unless both the House and Senate act to block it. ''This is a great victory for President Reagan,'' said Senator Thad Cochran, Republican of Mississippi, ''a very important first step in having his program adopted by Congress.''

Spurred by the biggest rebate campaign in the industry's history, new car sales by the Big Three auto makers increased 22 percent in the last 10 days of February. The companies sold cars at an average rate of 32,377 a day for the period, which had seven selling days, up from a rate of 26,514 in the comparable 1980 period, which had eight selling days. ''Buyers are definitely taking advantage of the cash-assistance program,'' Philip E. Benton, a vice president at the Ford Motor Company, said in a statement.

The Reagan Cabinet has become locked in a debate between free-trade purists and political pragmatists over whether to restrain imports of small, fuel-efficient Japanese cars. While both sides shun protectionism, the pragmatists argue that Japanese car imports represent a special case. According to State Department sources, Secretary of State Alexander M. Haig Jr. argued in Cabinet deliberations yesterday that import restrictions could lead to unfortunate political consequences that could weaken the international trading system. It was Mr. Haig's first personal intervention in the Cabinet discussions, a sign of the high political, as well as economic, stakes involved in a Presidential decision expected later this month.