LEAD: CONGRESS is packing itself off for an August vacation, leaving untouched the nasty business of cutting enough spending and raising enough taxes to squeeze $50 billion out of the ever-swelling budget deficit.

  The Operative Word in America: Deficit

LEAD: THE Merritt Parkway looks much as it did in September 1940, when workers finished the last links of the rolling, four-lane highway. But as the 50th anniversary of the Merritt's completion nears, the State Department of Transportation is considering an expansion of the roadway to as many as eight lanes.

At Age 50, The Merritt Faces a Fight For Its Future

LEAD: Federal regulators will seek to make changes in some deals in which the Government sold nearly 100 insolvent savings institutions in 1988, and they may try to cancel some of the sales.

Regulators Are Seeking to Revise Some Sales of Savings and Loans

LEAD: In his short life in the struggling Brownsville section of Brooklyn, 13-year-old Gregory Orr has seen a man shot to death in a crowded courtyard in broad daylight.

Growing Up Where Violence Wants to Come Play

LEAD: In a direct challenge to President Bush over the plan for an anti-missile system, the Senate today approved a major revision that would require the Pentagon to shift the focus from space interceptors to defenses on the ground.

SENATE APPROVES SHIFT IN STRATEGY FOR MISSILE SHIELD

LEAD: Is Iraq's Saddam Hussein another Hitler, who will gobble up neighbor after neighbor, until finally stopped?

MARKET WATCH

LEAD: At a time when there is pressure on men to be more caring and demonstrative to children, more and more men and organizations are worrying that casual physical contact with children may create the impression of sexual misconduct.

Caring for Children, Men Find New Assumptions and Rules

LEAD: A LOCAL developer's Victorian-style condominiums are designed to attract newcomers to a wealthy historic neighborhood in this mill city.

NATIONAL NOTEBOOK: Fall River, Mass.;

New Condos In an Old Area

LEAD: TULSA'S first apartment complex in five years is being built along Riverside Drive, the Arkansas River parkland corridor that connects downtown and the growing south side.

NATIONAL NOTEBOOK: Tulsa, Okla.;

After 5 Years, Apartments

LEAD: IN 1906, with the automobile still in its infancy, the millionaire William K. Vanderbilt 2d established a limited access highway to accommodate his annual Vanderbilt Cup motorcar race and to further his dream of making Long Island the automotive racing capital of the United States.

Dix Hills Questions Safety Of Historic Vanderbilt Road

LEAD: THE furor over Gov. Jim Florio's $2.8 billion tax reform program may have been unavoidable, political experts say, but many contend that a better effort to communicate its benefits could have minimized the public anger and skepticism.

Florio's Response To Tax Critics Is Questioned

LEAD: They have kept 11th Avenue in their baleful gaze since the early 20th century, but the four giant steer heads on the top of the New York Butchers' Dressed Meat Company slaughterhouses will soon be removed.

Postings: Cattle on the Move;   Slaughterhouse Four

LEAD: The 12 nations of the European Community imposed an immediate embargo today on oil imports from Iraq and Kuwait and said they would stop selling arms and other military equipment to Baghdad as punishment for having invaded Kuwait.

  Trade Sanctions Against Baghdad Imposed by European Community

LEAD: The St. Louis Cardinals reached up from last place in the National League East today and did what no team had done in two months: They defeated Dwight Gooden.

  Costly Lapse by Gooden

LEAD: The State of New York Mortgage Agency announced last month the start of a program that should make it easier for income-eligible, first-time home buyers to enter the housing market. It applies only to buyers who use conventional, rather than below-market-rate, financing.

Postings: Easier Down Payments;   Sonny Mae Adds a Program

LEAD: ''Rabbit AT Rest'' will be the fourth and last of my so-called Rabbit books. Each of them occurs in the ninth year of a decade and was written, more or less, in the ninth year of the decade.

Why Rabbit Had to Go

LEAD: FRANCESCO GALLO, director of international operations for the Fiat Group, had the proud and worried look of an expectant father as he paced through the half-finished $1.3 billion assembly plant that Fiat is helping build here amid southern Poland's fields of hay and corn.

Fiat's Thrust Into Eastern Europe

LEAD: It was a cloudy, gray morning here at the Pro Football Hall of Fame, and throughout the ceremony on the steps outside the building, a downpour appeared likely. But the rain never fell on the seven inductees and a spirited, elbow-to-elbow crowd of nearly 16,000 spectators. And the celebration turned out to be a sparkling tribute to the diverse array of stars that increased to 155 the number honored inside with bronze busts.

Landry 6 Others, Enter Hall

LEAD: UNFAZED by the failure of other projects here in past years, a developer is building a $3 million clubhouse and a marina on this semitropical resort island.

NATIONAL NOTEBOOK: Bald Head Island, N.C.;

For a Resort, Slow 'n' Easy

LEAD: FOR years now President Saddam Hussein of Iraq has been the bad boy of Arab politics, a classic bully who lived by the credo that crime pays and absolute crime pays absolutely. The Iraqi strongman was at it again last week, invading his neighbor Kuwait, holding up the whole country for its oil and gold, and then daring the world to do something about it.

  Iraq Makes Its Bid to Run the Show in the Middle East

LEAD:    Demolition Next Door       Question: I have received notice that the house attached to mine will be demolished. My home is brick and I am worried that after this building is torn down I could have water seepage and other problems. What steps must be taken to insure that the party wall will be restored?

Q and A

LEAD: Bent but not broken, the flagpole atop the Ferry Building was a powerful symbol of San Francisco's durability, its tensile strength, in the days after last October's earthquake.

San Francisco Limps In Repair of Damage Months After Quake

LEAD: What's in store for the Future, a 35-floor condominium, now about halfway completed, at 200 East 32d Street and Third Avenue?

Postings: In Murray Hill;   Future Perfect?

LEAD: ''I don't want to live in the past,'' says the private detective who is the protagonist of Jack Nicholson's new film, ''The Two Jakes.'' ''I just don't want to lose it.''

'Two Jakes' Picks Up The 'Chinatown' Trail

LEAD: Mixed-income housing is rising in this city's South End neighborhood, encouraged by city planning and financing that uses fees paid by developers of large downtown commercial projects to subsidize construction of low- and moderate-income housing in outlying neighborhoods.

August 5, 1990

Headlines from August 5, 1990

The Operative Word in America: Deficit

At Age 50, The Merritt Faces a Fight For Its Future

Regulators Are Seeking to Revise Some Sales of Savings and Loans

Growing Up Where Violence Wants to Come Play

SENATE APPROVES SHIFT IN STRATEGY FOR MISSILE SHIELD

Billboard 200

Please Hammer Don't Hurt 'Em

Wilson Phillips

Step By Step

I'm Breathless: Music From And Inspired By The Film Dick Tracy (Soundtrack)

Pretty Woman

Historical Context for August 5, 1990