Henry Reuss and Jimmy Carter had lunch alone yesterday. Not particularly earth-shattering news, on the face of it, except for this: Reuss, one of the most respected congressmen, had gone to the White House to put before the the President his thoughts on one of our gravest problems. And Jimmy Carter wanted to hear them. For the topic they were discussing, that's progress with a small "p". The good news in the case.

Their subject was cities. While the Carter administration is wrestling out its own ideas for a national urban policy, Reuss has come up with original observations himself. As chairman of the House Banking Committee, his words carry weight. But he's more than an influential Democrat; he's also been, as he says, "a city buff for as long as I can remember." A disturbed city buff, of course, whose recent efforts as chairman of a House subcommittee on the city led him to write a personal essay concluding: "After years as a member of the national legislature, I perceived that although hundreds of American cities were sick, some sick unto death, neither Congress nor the executive departments and agencies had anything like a coherent strategy for bringing the city back to healthy life."

It's his view that the wisest way to begin is not with more massive government programs. He thinks we should stop "expensive old and wrong things." That was part of his message at yesterday's meeting with Carter.

In their hour and a half conversation, they talked about job programs, city deterioration, rebuilding neighborhoods, conserving land and energy, and something else of critical importance - the need to reform federal programs.

If there remains any doubt about the need to perform that miracle, I offer the latest episode in the continuing story of Bates Street, a symbol of everything that Uncle Sam has done wrong.

When we last left Bates Street, nearly three months ago, the few families who still live there were still waiting for the promised to happen. They had been waiting for years, in fact, ever since the government came in with plans to purchase the buildings and rehabilitate them. Urban renewal. Hope for the slums, of which Bates Street is a sad but familiar example. Money was appropriated, buildings were purchased, some of the structures were gutted, and plywood went up over the outside of newly empty homes. Then nothing. Months, and years, went by. Still nothing. In the meantime, Bates Street, a small and drab byway only a few blocks from the Capitol, became even worse.

That was the scene described in a Fourth of July column. The people living there couldn't say what was going to happen to their block, or why nothing had happened over the years. They were not encouraged.

A few days after that article, a letter arrived from the office of the Secretary of the Department Housing and Urban Development. "Somebody does care about the people of Bates Street," it said in part. "A consortium of three minority firms will be named as a developer in the near future to rehabilitate the properties under a variety of HUD programs, with funding already committed by this Department."

After two months had passed, I revisited Bates Street. No change. The consortium of minority firms to be named as developer had not been named. That was still in the process of selection. At HUD, the person who had written the letter was embarrassed. "When I signed that letter I assumed it would be done," he said. I was referred to HUD's regional office here, which oversees Washington area programs.

There, the story becomes even more complicated and frustrating. Bate Street, on closer examination, turns out to be a case study of the thicket of government programs, of indecision and delays and inaction, of the difficult relationships between city and federal governments.

The day of my appointment last week with James Clay, the HUD official in charge of the Washington regional office, was supposed to be the day the developers finally would be named. Again, they weren't. The District of Columbia, it seems, goofed: the city missed the deadline to publish an announcement for legally required public hearings. Now the earliest that those can happen will be Nov. 2. No hearings, no developers, no construction, no rehabilitation.

"There have been delays," Clay says, "but not because there wasn't a plan and there weren't things going on back and forth between this office and the District. It's just some little things happened that caused big delays."

Clay is quick to concede that those "little things" cause bigger hardships for the people who live on Bates Street.

"That's very difficult to explain to somebody who's living in a substandard house," he says. "We're taking care of the needs of the bureaucracy as opposed to the needs of the people who are there."

But, he also says, "that must be done." And: "the procedures are there and there must be covered."

HUD officials will point to a number of problems: legal delays over property condemnation proceedings, disagreement among citizens' groups over whether Bates Street was worth restoring, overlapping responsibilities from a number of agencies, questions about whether there was ever any official Model Cities program for rehabilitation there. But in the end, there are certain facts that won't go away:

In 1969 HUD approved a plan for rehabilitation of that slum section. Money was appropriated. The rehabilitation hasn't happened yet. In fact, most of that urban renewal money is still upspent.

"How do you cut through the bull and the red tape and really get the project done and have a place to live?" Clay asked, rhetorically. "And I can say in all candor is that that is much, much easier to think and say than it is to do."

But, still, he's hopeful. "While it might have been taken time, we finally have a plan, one of many since 1969, but one that appears like a viable plan we can deal with." It's farther along now than it's ever been, he says.

Henry Reuss came away from his luncheon yesterday impressed by Jimmy Carter's responses and attitudes. The President had been receptive. From Reuss' vantage point, "it was a remarkable opportunity and I took full advantage of it."

It helps to have a Prsident who listens. But that won't solve the problem of the cities. Nor will it do much to speed the process on Bates Street.

Presidents often find they are frustrated by their lack of real powers. They can't make the trains run on time, they can't guarantee the mails, they can't prevail in any number of important areas.

They can't rebuild Bates Street, either. All they could do, perhaps, is ask their officials to go there. One sight should be enough. No one would want to live there.