Congress has spent much of the past year going in a circle. Last winter the compelling subject of conversation was the budget deficit and how to reduce it. Then as time passed with the White House resisting any very dramatic reductions, congressional attention shifted to trade. At one point more than two-thirds of the House joined in sponsoring the outrageously protectionist textile bill. But as more time passed people discovered that, far from reducing unemployment, the bill would only shift it from the textile factories to other industries with fewer friends in Washington. By the time the bill passed the House last week, some of its own sponsors were against it. The vote fell well short of the two-thirds that it will need to override the veto that President Reagan has promised.

Trade protection, as a cause, has been losing momentum because Congress realizes that the real threat is not imports but the overpriced dollar that pushes them out of balance with exports. And why is the dollar so high? It's mainly owed to high interest rates, which in turn are mainly owed to the enormous scale of the Treasury's borrowing -- that is, the budget deficit. Which brings the conversation back to the same unhappy point where it was last January.

Since its successes in deficit reduction have been modest at best, Congress is seized by a kind of desperation when it finds itself returning once again to the unwelcome prospect of $200 billion-a-year deficits stretching out into the future as far as the eye can see. It's not only the trade issues. Whenever congressmen pick up any question with a dollar sign attached to it, they soon find themselves dealing inescapably with the deficit. By keeping interest rates high it makes the Latin countries' debts harder to manage. The same deficit and the same interest rates threaten the stability of banks and thrift associations in this country. And all these things are connected to each other. The Latin debts add to the shakiness of some of the American banks. As a result the American banks have all but stopped lending abroad, which has further pushed up the exchange rate and added to the trade imbalances that bring cries for protectionist laws that will make the trade imbalances worse.

But there is one remaining optimist, and he is in a position of influence. Mr. Reagan thinks that economics is baloney and trusts his instinct, which tells him that things will work out if left to themselves. He favors a lower deficit in principle, but since he opposes all the ways of achieving it he is prepared to live with the status quo. The basic division in Washington on all questions of money and deficits is not between the parties, or between the administration and Congress, but between those people who think that there's real reason for concern and the one person who does not.