August 14, 1982

President Reagan defended his proposed tax increase today as his aides acknowledged that the Administration's lobbying drive had so far failed to win enough support to insure passage of the measure by Congress. Declaring that it was ''plain hogwash'' to suggest that his legislation called for the largest tax increase in history, Mr. Reagan said the measure was actually ''80 percent tax reform'' and 20 percent tax increase, all of it essential to keeping deficits down. The measure would add $98.9 billion to Federal revenue over three years. ''I would prefer to reduce our budget deficits by continuing to reduce Government spending, and I still think that there is more to be done in that regard,'' Mr. Reagan said in response to a question at a unannounced news conference in the White House briefing room.

Pop music's worst business summer in recent years is drawing to a close, and some insiders in the music industry are saying that an era appears to be ending. Summer concert revenues are down drastically from previous years, pop record sales are a fraction of what they were in the 1970's, and music industry executives are increasingly concerned that young people are taping albums rather than buying them and spending their money on video games rather than on records and concert tickets. CBS Records announced yesterday that it was discharging 300 employees - 15 percent of its professional staff -including several vice presidents, and reducing its regional branch offices from 20 to 10. Robert Altschuler, the company's vice president of press and public affairs, attributed the dismissals and branch reorganization to ''current and projected market conditions.'' 'Real Bottoming-Out' Another insider in the record business said that there had been ''an almost complete lack of business, a real bottoming-out.'' The CBS action is the latest and most severe cutback in a wave that has swept the industry and is expected to continue at other companies.

The Federal Reserve Board yesterday lowered the interest rate that it charges for loans to banks and financial institutions by one-half percentage point in another effort to encourage lower interest rates and stimulate the economy. The reduction in the Federal Reserve's discount rate, to 10 1/2 percent from 11 percent, was the third half-point cut in six weeks, and resulted in the lowest charge in nearly two years. ''The Fed is setting a clear policy of being more accomodative and injecting more reserves into the economy,'' said Producer prices for finished goods rose six-tenths of 1 percent, while industrial output and factory utilization fell slightly in July. Page 35.

The Occidental Petroleum Company yesterday offered to pay approximately $4 billion for the Cities Service Company, which has been scrambling to find a merger partner since the Gulf Oil Corporation withdrew its offer a week ago. Analysts and stock market traders expressed delight, saying the deal may save Wall Street investors hundreds of millions of dollars they feared they had lost when Gulf bowed out of its planned merger with Cities Service. In addition, experts suggested that the psychological impact of the multibillion dollar deal could buoy the entire stock market. Arbitragers Jubilant ''It's Christmas come early,'' said Michael Sofia, vice president of arbitrage at the brokerage firm of E.F. Hutton. ''Investors may look more favorably on stocks in general because of this,'' added William LeFevre, a market strategist for Purcell, Graham & Company.

Describing a tense and angry week of deliberations marked by confusion, four of the jurors in the Queens trial for the killing of one police officer and the wounding of another now say they are dissatisfied with their verdict, which one of them termed ''crazy.'' In seven days of deliberation, the jury was unable to reach a verdict on the major charge of murder in the death of Officer John Scarangella, but it convicted the two defendants on the lesser charge of attempted second-degree murder in the wounding of his partner, Officer Richard Rainey. The officers were sitting in the front seat of their patrol car on April 16, 1981, in St. Albans, Queens, when two assailants fired more than 30 shots into the car. Of the 12 jurors, only five agreed to be interviewed about their deliberations. The others either could not be reached or declined to talk about the case.