May 10, 1985

FRIDAY, MAY 10, 1985 The Economy The Senate early this morning tentatively approved by one vote, 50 to 49, a 1986 budget that would limit the military spending increase to the inflation rate and eliminate the Social Security cost-of-living increase for one year. [Page A1.] The President's tax plan has made accommodations to ''political realities'' regarding charitable contributions, capital gains and business depreciation, the White House chief of staff said. [D2.] New York State has begun an effort to preserve the deductibility of state and local taxes. [A1.]

New York has begun using its economic and political leverage in an effort to preserve the Federal income-tax deduction of state and local taxes, which President Reagan is expected to ask Congress to repeal. Governor Cuomo and a number of business, labor and civic leaders -seeking to go on the offensive before Mr. Reagan makes his proposal -have been talking to members of Congress and trying to mobilize a lobbying campaign by voters in New York and other states. As the Administration's tax plan takes shape, the President reportedly is easing his stand on taxing charitable contributions and capital gains and on business depreciation. [Page D2.] Mr. Cuomo, in a demonstration of how strongly he feels about the local-tax deduction issue, told a gathering of contributors to the Democratic Senate Campaign Committee last week that he would not help out-of-state Congressional candidates raise money in New York if they opposed the state's position.

The Federal Aviation Administration has drafted a plan to tackle one of the big remaining problems in aviation safety - the performance of pilots and other employees in the industry. The plan calls for pursuing a list of projects to address 30 ''human factor'' issues ranked in order of importance. Most of the projects are aimed at preventing pilot error, with emphasis on assuring that the accelerated use of automation in aircraft and ground equipment does not increase the workload in the cockpit. ''This is the first time that the F.A.A. has taken a comprehensive look at the one link in the entire chain of aviation operations, the human being,'' said a spokesman, Dennis Feldman, ''Previously, it has been mostly piecemeal.''

Under this heading, The Times amplifies articles or rectifies what the editors consider significant lapses of fairness, balance or perspective. An obituary last Friday reported the death of Milton S. Eisenhower, the diplomat and educator.

The Republican-controlled Senate voted early this morning by 50 to 49 for a 1986 budget that would limit the military spending increase to the inflation rate and eliminate the Social Security cost-of-living increase for one year. The Republican victory required the vote of Vice President Bush to break a 49-to-49 tie. And the Republicans were that close only because they brought Senator Pete Wilson of California from a hospital to the Senate chamber to vote yes, a day and a half after his appendix was removed. Twelve hours earlier, Senator Bob Dole, the majority leader, announced that President Reagan had agreed to the proposal. The President's support came despite reservations about both the millitary and Social Security provisions, according to White House officials. For the military budget, the agreement by the President appears to spell the end of the rapid buildup he has sought since taking office in 1981.