March 13, 1982

Calling the Reagan Administration's policy on Central America ''confused and dangerous,'' two Democratic Senators proposed legislation today to require prior Congressional approval for military action and covert intelligence operations in the region. The Senators, Paul E. Tsongas of Massachusetts and Christopher J. Dodd of Connecticut, said they would try to attach their bill to President Reagan's Caribbean Basin Initiative or to any other legislation that offered a chance for quick action. The measure is the most comprehensive introduced so far with the aim of giving Congress greater control over Administration moves in Central America. It reflects a growing determination on Capitol Hill to check any active intervention by the United States before it goes too far in the view of legislators.

The Environmental Protection Agency announced its ''national contingency plan'' for dealing with abandoned hazardous waste sites today. The plan is intended as the Federal Government's response to the problem posed to public health and environmental quality by thousands of such waste dumps throughout the country that, until now, have been largely ignored. In the past, health emergencies such as that caused by the seepage of chemical wastes in the Love Canal neighborhood of Niagara Falls, N.Y., have been dealt with piecemeal. Criticism and Praise The contingency plan, which was required by law to provide a comprehensive approach to the threat of toxic wastes, met with immediate criticism from environmentalists and some members of Congress but was praised the chemical industry.

For the first time in six years, the Government's Producer Price Index fell last month, providing the most dramatic evidence thus far that inflation is falling. The decline was small, one-tenth of 1 percent, an annual rate of 1.7 percent, the Labor Department reported today. That was down from an average rise of nearly four-tenths of 1 percent in the three preceding months. Most economists had expected that the index, which foreshadows the direction of retail prices, would show another modest increase despite the severe recession.

A White House official said today that the Reagan Administration would cancel its offer to pay all state Medicaid costs if the nation's governors persisted in their refusal to take over Federal food stamp and welfare costs. Richard S. Williamson, President Reagan's assistant for intergovernmental affairs, said the Administration was seriously considering scaling down its ''new federalism'' proposals in the face of the governors' opposition to major elements of the package. The President wants the states to take responsibility for food stamps and the program of Aid to Families with Dependent Children as part of a sweeping realignment of Federal and state responsibilities. But several governors have said that welfare and food stamps should be ''set aside'' in the negotiations.

When the siren screams, police chases, milling throngs and traffic jams had subsided around the Empire State Building yesterday at lunchtime, a passer-by asked a security guard what had happened. The guard sighed. ''What's the use?'' he said. ''If I told you, you wouldn't believe me.''