August 8, 1986

Four people were killed and one was critically injured yesterday morning when two luxury cars, one of them driven by a 14-year-old girl, collided head-on along a rural road in Farmington, Conn., the police said. Those killed were three teen-agers in a 1984 Mercedes-Benz and a 64-year-old man driving alone in a 1985 Cadillac, said Lieut. Paul Capodiferro, a spokesman for the Farmington police. The fourth passenger in the Mercedes was flown by helicopter to Hartford Hospital, about 10 miles away.

The Economy An accord that would restrict deductions for I.R.A. accounts appears at hand. House and Senate tax-bill conferees agreed that-workers covered by company pension plans could deduct the full amount of their I.R.A. contribution only if their income were less than $40,000 for a couple and $25,000 for a single person. There would be partial deductions for incomes up to $10,000 higher than those figures, but above that no deduction. Existing I.R.A. rules would continue to apply to workers not covered by private pensions. [ D1. ] Sales at 10 large retailers rose in July, with increases ranging from 3.4 percent to 41 percent. Analysts noted, however, that larger-than-usual markdowns were necessary to move goods. [ D3. ] Amer-icans took on $5.07 billion more in consumer credit than they paid off in June. [ D14. ]

A performance schedule in Weekend on Aug. 1 with an article about outdoor theater gave incorrect locations for Jacob Riis Park and Kissena Park. Jacob Riis is in Rockaway, Queens; Kissena is in Flushing, Queens.

Earlier this year, the nation's big banks reported booming profits from foreign-exchange commissions, securities trading and surging values of bond portfolios. But such huge windfalls in areas outside of lending were unlikely to go on forever, and they did not. As a result, many banks have reported flat or reduced earnings for the second quarter. Some banks, notably J. P. Morgan & Company's Morgan Guaranty Trust Company and the Bankers Trust Company, did continue to post healthy gains in earnings from investment banking. Analysts said they were impressed by the continued ability of such organizations to maintain and even increase earnings in a difficult banking environment.

Facing intense Republican pressure to seize the narcotics issue quickly, the White House tentatively plans to propose a $100 million program next week aimed at combating the use of drugs in schools, Administration officials said. Administration officials said that Republican legislators had told the White House that unless the Administration drew up specific legislation quickly, the Republicans in Congress would feel compelled to endorse a comprehensive $2 billion to $3 billion antidrug bill that is being pressed by the Democratic leadership. The officials said intense Republican political pressure to keep Democratic politicians from capitalizing on the drug issue was a factor in overcoming President Reagan's resistance to committing large amounts of money to drug programs. How It Would Be Administered Although Mr. Reagan in recent years had limited the amount of Federal funds for narcotics programs, Administration officials said that several weeks ago he enthusiastically supported a national antinarcotics campaign. But, they said, the details were bogged down because of considerable internal debate.