President Reagan invoked the image and words of Thomas Jefferson yesterday in appealing for an "Economic Bill of Rights" that he said would force government to "live within its means and balance its budget," a goal unattained amid the huge federal deficits of his presidency.

Seeking to revive his sagging political fortunes, Reagan returned to his favored themes of limits on the power and scope of government in a sweltering Independence Day celebration at the Jefferson Memorial.

He delivered an address designed in part to capture attention before the Iran-contra hearings resume Tuesday with the first public testimony by his fired National Security Council aide, Marine Lt. Col. Oliver L. North.

"Those who attain political power must know that there are limits beyond which they will not be permitted to go, because beyond that point their intrusion is destructive of the economic freedom of the people," he said.

"The working people need to know their jobs, take-home pay, homes and pensions are not vulnerable to the threat of a grandiose, inefficient and overbearing government -- something Jefferson warned us about 200 years ago," he added.

He renewed his call for a constitutional amendment mandating a balanced federal budget and his opposition to tax increases. He described taxation as "the harnessing of free people; it is forced labor and, if it goes beyond reasonable bounds, it is a yoke of oppression."

Reagan said Jefferson would champion these causes because in 1798 he wrote that the Constitution should have included an additional article "taking from the federal government the power of borrowing."

Since Reagan took office, the national debt has doubled, and he has never submitted a budget in which he proposed raising enough revenue to pay for services he wanted government to perform.

The president did not signal interest yesterday in compromise with the Democratic-controlled Congress to reduce the deficit this year. Instead, White House officials said, he was laying out a manifesto that he will use in the final 17 months of his presidency to set the stage for the 1988 campaigns.

"I think the president may have decided that his best strategy now is to resort to the rhetoric of 1980 and 1981 which brought him to the presidency and some success," said Sen. John F. Kerry (Mass.), responding for the Democrats.

"It may signal his giving up in the responsible effort to deal with the deficit, the heralding of a strategy aimed toward the 1988 elections and the framework of his legacy, but not really governing. If that's true, and I hope it's not, it would be very, very sad," Kerry said.

Senate Majority Leader Robert C. Byrd (D-W.Va.) said, "What the American people really need is not a speech in front of the Jefferson Memorial filled with shopworn ideas and wrapped in patriotic bunting. What this country needs is a declaration of independence, independence from the Reagan deficits, independence from the Reagan debt."

Kerry added, "The president invokes Jefferson and borrowing, but he's the biggest borrower in the history of the republic."

Speaking in shirt-sleeves, Reagan was applauded occasionally by a crowd of several thousand people limited to those with tickets provided by the event's sponsor, the U.S. Chamber of Commerce. Some members of the public were turned away by security agents.

The president renewed his appeal for authority to veto specific items in spending bills. He also proposed that any tax increase require more than a simple majority in Congress. Kerry said this idea has "zero" prospect of approval.

Reagan proposed that any "new program" approved by Congress be "What this country needs is a declaration of independence . . . from the Reagan debt."

-- Sen. Robert C. Byrd (D-W.Va.)

accompanied by equal offsetting cuts or new taxes to pay for it. Officials were vague about how this would apply. For example, they said it would not be used on Reagan's Strategic Defense Initiative, or "Star Wars" missile defense plan, because it is not a "new" program.

Reagan said he is proposing "truth in spending," although his budget proposals have often had major omissions. The president also announced creation of a commission on "privatization" and, as part of the "Economic Bill of Rights," the White House issued fact sheets on previous proposals in such areas as deregulation, revising the budget process, welfare reform, education and trade policy.

Reagan also hailed recent Supreme Court decisions on property rights, saying that "property rights are central to liberty and should never be trampled on."

The address came a year after his appearance at an Independence Day celebration in New York Harbor that marked a high point in Reagan's popularity but was followed by several difficulties, including loss of GOP control of the Senate and disclosure that he had violated his policy by sending arms to Iran.

Yesterday's event included military bands, balloons and daytime fireworks in an attempt to recreate some of last year's magic. The crowd's response was subdued in the intense heat.

Reagan, who has repeatedly denied that his presidency is running out of steam, quoted a "saying in colonial times" that "there are two ways to get to the top of an oak tree where the view is much better.

"One is to climb; the other is to find an acorn and sit on it. Well, I didn't come to Washington to sit on acorns. It's time to roll up our sleeves and start climbing."