House OKs $720 Million in Aid to Nicaragua, Panama : Congress: Senate Democrats are threatening to delay some funds. Bush wants action by Thursday.

The House gave overwhelming, bipartisan approval Tuesday to $720 million in economic aid for Nicaragua and Panama, meeting President Bush’s request for speedy action. But Senate Democratic leaders continued on a partisan course likely to result in funding delays.

State Department spokeswoman Margaret Tutwiler, while praising the Democratic-controlled House for its support, warned that “democracy could be at risk in Central America” if the Senate fails to complete action by Thursday, as Bush requested.

Brushing off the warning, Senate Majority Leader George J. Mitchell (D-Me.) stood by his demand that the Administration first produce a long-range plan for providing aid to an expanding list of countries.

Mitchell suggested that the Senate would go along with approving a limited sum for Panama and Nicaragua this week, withholding action on the rest until a broad foreign aid plan is presented.

Tutwiler promised talks on such a plan but said that funding for Nicaragua and Panama should not be held “hostage” in the meantime.

And Bush, speaking to reporters as he flew aboard Air Force One during a day of political fund-raising in Indianapolis and Dearborn, Mich., said, “It is absolutely essential that we get funding for both Nicaragua and Panama.”

Responding to Mitchell’s criticism that he had presented a “jigsaw puzzle” instead of a comprehensive foreign aid plan, Bush said: “There’s no jigsaw puzzle when it comes to what is best for democracy in Nicaragua and no jigsaw puzzle when it comes to what is best for Panama.”

House Speaker Thomas S. Foley (D-Wash.), although clearly inclined to give the President full cooperation, signaled that he was acceding to the partisan strategy of Mitchell and other Senate Democratic leaders, including Appropriations Committee Chairman Robert C. Byrd (D-W. Va.).

Foley conceded that Congress might pass only a modest down payment to Panama and Nicaragua before going on a 12-day recess Thursday.

“The important thing probably is to provide some assurance . . . that we are going to provide assistance,” he said. “We probably will provide most of this aid, if not all of it, but on a schedule perhaps slightly less urgent than the Administration is suggesting.”

The House, on a vote of 362 to 59, approved taking $720 million from U.S. defense programs to help repair the battered economies and boost the new governments in the two Central American countries.

The legislation largely meets Bush’s March 13 request for “urgent” economic aid “to advance the prospect for democracy” in both nations.

The bill provides all $300 million sought by the President to assist the newly elected anti-Sandinista government in Nicaragua. A $30-million sum is earmarked for the demobilization of the Contras, Nicaraguan rebels long backed by the Reagan and Bush administrations.

The measure trims $80 million from Bush’s request of $500 million to help rebuild the Panamanian economy following the ouster of dictator Manuel A. Noriega.

The $2.4-billion omnibus spending measure--which also provides refugee aid and funds various domestic programs that are running out of money--would be financed primarily through $1.8 billion in defense cuts.

Besides aid for Panama and Nicaragua, the House bill provides:

$400 million in housing loan guarantees to help Israel settle Soviet Jews.

$70 million to help care for refugees entering the United States, plus $30 million to assist refugees in other countries.

$1.5 billion for food stamps, fuel subsidies for the poor, unemployment compensation and disaster relief.

$390 million for veterans benefits.

Times staff writers Norman Kempster, in Washington, and James Gerstenzang, in Indianapolis, contributed to this story.