Declaring that ''the country is in trouble,'' Rep. Henry S. Reuss (D) of Wisconsin proposes a three-part plan to resolve the budget crisis: (1) repeal the 1983 tax cut of 10 percent to help balance the budget; (2) hold down military spending to the level of past years; and (3) order the Federal Reserve System to adjust interest rates downward.
The influential chairman of the Joint Economic Committee, a 27-year veteran of Congress, would tie his proposals to the coming congressional budget resolution that must be approved not later than May 15.
The Reuss proposal, made here in testimony before the Senate Budget Committee , represents an effort to take over the initiative in the budget fight from the White House, on a nonpartisan basis. It would also assert the authority of Congress over the Federal Reserve System, which is a creature of Congress, although it acts independently to raise and lower interest rates.
The Reuss move indicates the uneasiness in Congress and the trend toward bipartisanship in legislative leadership. Congress faces two deadlines: It must pass the first budget resolution setting the course for the year, and it must increase the debt ceiling, now over $1 trillion.
Reuss is worried that Congress won't be able to work out a bipartisan budget resolution by early May, which ''would court an extraordinary peril.'' In the absence of a bipartisan alternative to the Reagan budget, the resolution to extend the debt ceiling will become ''a referendum on the economic performance of the administration,'' he warns. He says the administration ''will fail'' in such a referendum. Faced with this threat, the influential Joint Economic Committee chairman wants Congress to take matters into its own hands on a nonpartisan basis.
Speaking as an influential member of one legislative branch, Mr. Reuss told the powerful budget committee of the other branch that the country is heading into an emergency and that all parties ''must come to the rescue of the nation's beleaguered economy within the next 60 days.''
The most controversial Reuss proposal is the plan to reassert legislative authority over quasi-independent Federal Reserve System. As the executive and legislative branches have piled up inflationary deficits over the years, the Fed has put on the monetary brakes by increasing interest rates.
The price of the discipline imposed by the Fed has been a slowed economy and higher unemployment, now threatening to go shortly over 9 percent. The situation is coming to a head with the President's call for lower taxes, higher arms expenditures, and big deficits. Reuss acknowledges reluctance to interfere. His proposal is to order the Fed to ''relax'' its tight money policy and stretch out its targets of control from a one-year to a two-year basis.
He asks Congress to adopt the following resolution as a signal to the Fed:
''The Federal Reserve shall adjust the monetary targets in effect for 1982, so as to permit interest rates to fall. Should changing economic conditions render a departure from this directive desirable, the Federal Reserve should so report to the two banking committees of the Congress.''
In effect, Reuss is leading a drive to reduce the independence that Congress delegates to the Fed. ''I do not offer this language lightly,'' he told the Senate Budget Committee.
But ''it is my belief,'' he added, ''that if we do not act now to change the course of monetary policy as well as that of taxes and spending, we invite far greater legislative risks in the near future.''