Treasury Secretary W. Michael Blumenthal told the Senate Banking Committee yesterday that Federal Reserve Board Chairman Arthur F. Burns "has been about right" in the degree to which he has driven up interest rates in recent months to restrain the growth of the money supply.

Other administration policy-makers - most notably the Council of Economic Advisers chairman, Charles E. Schultze - have said that rising interest rates could stifle economic recovery, primarily by choking off capital investment. And yesterday Congressional Budget Office Director Alice Rivlin gave similar testimony.

But Blumenthal, considered "liberal" within the business community, nevertheless is becoming the main voice of business within the administration. He said that rising interest rates have done no damage yet, and if they start to, "I have no doubt that he [Burns] will adjust."

Blumenthal, who thus followed President Carter by a day in reassuring the business community that the administration has no quarrel with Burns, also suggested that Carter may substantially curtail his promised tax "reform" proposals, now scheduled to be sent to Congress early next year.

Business has been fearful that these proposals would cost it tax breaks, especially for capital gains. Blumenthal said soothingly that the "first priority, ahead of tax reform," is a "simple" major tax cut for individuals and business that will help restore business confidence.

He said Carter would announce his tax plans for next year within about two weeks - an apparent acceleration of the schedule.

In an exchange with Sen. Adlai Stevenson (D-III). Blumenthal said that the administration would not forget "the objective of reform," but that "the first objective has to be jobs, and [control of] inflation and growth of the economy."

He repeatedly endorsed other Burns comments of recent days, agreeing that "the time has come to reduce [Carter's economic] initiatives" and that it is urgent to maintain a strong dollar.

In contrast to statements he made earlier this summer, Blumenthal said "there is no gain for us in a devaluation of the dollar," and promised that the United States would not follow policies designed "to bring about a decline in the dollar."

But he rejected a suggestion made before the Banking Committee on Thursday by New York banker Robert V. Roosa for a cooperative effort with Japan and West Germany for regular or massive intervention to support currency levels.

"The strength of the dollar is important to us," he said, "but it must be based on realities."

Bumenthal also said Burns "was right" in his opposition earlier this year to Carter's proposed $50 tax rebate, a conclusion known to be diametrically opposed to that now held by most other Carter economic advisers.

Blumenthal said his warm words for Burns and for recent monetary policy "had no implications" that Burns would be reappointed when his term as chairman of the independent Federal Reserve Board expires Jan. 31.

At a minimum, Blumenthal's benigh attitude and Carter's Thursday press conference denial of major disagreements with Burns indicate that the administration has decided it is fruitless to go public with its policy disagreements with the venerable chairman.

Administration criticism of Fed policy reached a peak Oct. 20, when the White House Posted a warning that higher interest rates could put a crimp in economic recovery. Blumenthal was saying yesterday that this doubt that he [Burns] will adjust if the sees the economy going down hill."

Sen. William Proxmire (D-Wis.), chairman of the Banking Committee, said he was "perplexed, puzzled, and disappointed" by Blumenthal's support of what Proxmire labeled a restrictive money policy, at a time "I thought the administration was trying to expand the economy."

But Blumenthal turned down every opportunity Proxmire gave him to disagree with Burns, saying: "I'm satisfied the Fed has followed and even-handed policy."

A grimmer view of recent Fed policy was given by Congressional Budget Office Director Rivlin, who testified that short-term interest rates are "rapidly approaching levels that have caused economic activity to weaken in th past."

Meanwhile, it was learned that the administration is reviewing a compromise suggested by economist Andrew F. Brimmer under which Burns - if he agrees - would stay as chairman for only about two years beyond Jan. 31: the normal appointment is for four years.

Brimmer, a noted black economist and himself mentioned in speculation as a possible successor to Burns, wrote Carter Sept. 16, calling attention to a Civil Service requirement that a govenment employee over 70 must retire when 15 years of service are accumulated, unless there is a special exemption by presidential order.

Brimmer put his idea in writing (with a copy to Burns) at Schultze's suggestion.The retirement point would be reached for Burns, under these rules, early in 1980.

Thus, if Carter and Burns struck a deal, Brimmer says the administration would have assured the business community of Burns' hand at the helm until he is 75. And since the term of member David Lilly expires Jan. 31. Carter could then name a new member who could be Burns' heir apparent. That appointment could be responsive to demands of Carters liberal constituency for a change in management of the Fed.