In the spending choices it made, the 101st Congress took major steps toward shifting America's priorities back toward pressing domestic concerns by providing the biggest increases in a decade for public works, education and environmental protection.

Congressional sources yesterday predicted that the priorities established by the Appropriations committees as a result of a one-time, $20 billion "peace dividend" will be felt across the United States and will help to cushion the nation against the impact of recession and military personnel cuts. This largely unpublicized windfall was allowed in the deficit-reduction package endorsed by the White House and Congress. Senior congressional aides said it signified a recognition by the president and his advisers that investment in domestic programs would be smart anti-recession economics as well as good politics for 1992.

Uncertainties over the Persian Gulf crisis and future developments in the Soviet Union prevented Congress from making a clean break with the past. Many lawmakers expressed a desire to declare an end to the Cold War, and their votes enabled Congress to cut $10 billion from the Pentagon's initial request for procurement. But Congress also failed to eliminate a single major weapon system and ended up giving the administration all the money it wanted for a tactical nuclear missile designed for NATO in the depths of the Cold War.

Nonetheless, the emphasis on problems closer to home was evident in double-digit percentage increases for the Head Start preschool program, environmental protection, health research and educational enrichment programs for disadvantaged children. In addition, appropriations bills were stuffed with more public works programs than had been seen for a decade.

These include a $700 million increase over 1990 spending in federal aid to states for highway and bridge construction, funding for 10,000 new public housing units, dozens of river and harbor projects, university building programs and a number of big-ticket federal projects such as the atom-smashing Superconducting Super Collider in Texas. The super collider, the cost of which could reach $8 billion, will provide construction jobs for thousands and is reminiscent of the huge dam projects in the West that gave jobs to thousands of returning World War II veterans.

This modest splurge in public works spending did not happen by accident, congressional officials said.

"The troops are coming home," said a senior House Appropriations Committee aide in referring to military personnel cuts. "They've got to find productive work. If we cut back, they become a cost to the economy. These investments have to be made and you can't look to the private sector to build highways. It won't do it."

Seen that way, the big emphasis on public works spending in the interior, water and housing appropriations bills tie in with the cut of 78,500 uniformed personnel mandated in the defense bill. By the same token, the $8.5 billion military construction bill was tailored to an emerging, post-Cold War era. The total is about the same as last year. But Congress completely reordered priorities within the bill, slashing spending on construction abroad and beefing it up in the United States. That pleases members of Congress, puts their constituents to work and sets the stage for a more homebound military establishment.

"The country is ready for change," said Rep. Vic Fazio (D-Calif.). "This {spending program} evolved without an overall game plan. But there was a tacit recognition that we needed to stop running in place."

Fazio noted that senior members of the House Appropriations Committee, as well as Senate Appropriations Committee Chairman Robert C. Byrd (W.Va.), are older Democrats with memories of the New Deal and a deep-seated belief in using government appropriations for job creation.

In other ways, too, Congress signified that it was turning inward, and away from its decades-long engagement abroad.

In the final hours of the session, the Senate approved an appropriations bill that stripped out the U.S. contribution to the planned new NATO base in Crotone, Italy. Opponents, led by appropriators Jim Sasser (D-Tenn.) in the Senate and Bill Alexander (D-Ark.) in the House, argued that changed circumstances in Eastern Europe made the base unnecessary.

Along the same lines, Congress, after years of struggle over the issue, tilted away from a long-standing commitment in Central America by withholding half of the U.S. military aid to El Salvador.

Domestic concerns and the new buzzwords "job creation" also figured in the foreign aid debate more than in recent years. Rep. Dean A. Gallo (R-N.J.) sought to persuade members to vote for the $14.7 billion foreign aid measure by noting that it provided credits to U.S. companies to export goods abroad, and therefore promoted jobs in this country. Byrd and Senate Minority Leader Robert J. Dole (R-Kan.) tacked on a requirement that $300 million of the economic aid that the United States provides to foreign countries be spent in this country. That is a sixfold increase.

Even so, the bill was almost derailed by the overwhelmingly negative reaction House members got from home districts on President Bush's plan to forgive U.S. military loans to Egypt. House-Senate conferees finally agreed to a procedure enabling the president to forgive the debt, but late Saturday House members denounced the notion of forgiving the loan while raising taxes on Americans. The House cleared the bill by only an 18-vote margin.

Still, the 101st Congress seemed unable to quite bring itself to make a clean break with America's postwar history of vast military commitments. It forced Bush to accept a 33 percent cut in his request for funding of the Strategic Defense Initiative, but moved ahead on most of the big-ticket hardware items associated with U.S. military global reach: an 18th Trident submarine; B-2 "stealth" bombers up to a total of 15; and a $405 million, full-scale overhaul of the aircraft carrier USS John F. Kennedy. The Kennedy decision, critics charged, limits Defense Secretary Richard B. Cheney's maneuver room in reducing the U.S. carrier force worldwide.

Appropriators also allocated $200 million toward full-scale development of the Air Force's Advanced Tactical Fighter, an expenditure that the policy-making Senate Armed Services Committee had expressly prohibited.

But members cautioned that some of these decisions will be reversed in the next Congress, and stressed that many of the decisions in the defense budget were driven as much by home-front concerns about jobs as by the fading ideological passions of the Cold War.