What the Senate is really arguing about in the fiscal 1984 budget resolution now before it is how to lower future deficits so that federal and private borrowing needs together will not be so great as to boost interest rates and choke off economic recovery in the years ahead.

With interest rates now much lower than in 1981 and 1982, and with a recovery from the recession apparently solidly under way, warnings about a danger that remains theoretical and a year or two away were not enough to cause the Senate to break with President Reagan this week and vote for the tax increases or defense cuts that he is fighting.

The Senate will try again next week, but, even if it succeeds in its search for a compromise on the budget resolution, deficits will be stuck between $150 billion and $200 billion for years to come.

Many economists believe that sooner or later deficits of that magnitude will present the Federal Reserve with a dilemma: accommodate the total demand for credit with the danger of a revival of inflation, or keep the total amount of credit growing in a non-inflationary way, letting the struggle for funds drive up interest rates.

Only a few economists believe the Fed can escape such a choice. These are mainly conservatives still arguing that additional domestic spending cuts can provide a way out.

Yet, if anything seems clear from the budget debate in the Senate and the House, it is that further large cuts in domestic programs are not in the cards. They are no longer being pushed by many members in either body.

Sen. Lawton Chiles of Florida, ranking Democrat on the Senate Budget Committee and the leader in the push for immediate tax increases to reduce deficits, read the Senate a letter from Wall Street economist David Jones of Aubrey G. Lanston & Co., warning that a failure to move in that direction could cause long-term interest rates to jump by as much as 2 percentage points from their current levels.

Other financial market analysts were more sanguine. Alan Greenspan of Townsend-Greenspan & Co. said that to the contrary market participants already assume that Congress will not act to reduce the deficits until sometime after the 1984 presidential election. Thus failure to act probably would have little effect on interest rates this year, Greenspan said.

The longer term outlook is a different matter. Reagan administration economists, including Martin Feldstein, chairman of the president's Council of Economic Advisers, have argued repeatedly that large budget deficits mean high interest rates relative to some measure of inflation.

High real interest rates, in turn, mean a continued high value for the dollar relative to other currencies, a large trade deficit and unemployment in the United States at a higher level than it otherwise would be.

Nevertheless, President Reagan, who used the annual budget process during the last two years to get enactment of parts of his major tax and spending policies, has made it known that he would rather have the Senate pass no budget resolution than pass one calling for higher taxes or a smaller defense spending increase.

Economist Otto Eckstein of Data Resources Inc. found unusual solace in the inability of Congress to deal credibly with the long-range budget problem.

"I think it will be very helpful if Congress doesn't pass a budget resolution," Eckstein said. "It will dramatize more quickly to the public the way in which this administration has led the budget to chaos with its tax cuts and defense increases."

Eckstein said that the recovery is strong enough that it "would not peter out even if you got rid of the July 1 tax cut" of 10 percent in personal income tax rates. "From the long range point of view, it would be better to scrap it."

But failing to pass a budget resolution would not resolve the basic problem of federal domination of the credit markets for years and years.

Chiles noted in the debate that even in fiscal 1988 under his plan, deficits would still be so large that the federal government would be absorbing about 40 percent of all private saving once allowance is made for replacement of machines and buildings as they wear out.

The deficits under the version of the resolution offered by Budget Committee Chairman Pete V. Domenici (R-N.M.) and the Republican Senate leadership would sop up between 75 and 100 percent of the available net private savings, according to various estimates by economists.