RIOT AFTERMATH: GETTING BACK TO BUSINESS : Clinton Offers Views on Recovery : Tour: On a visit to riot-torn areas, the Democratic front-runner says residents need to be ‘empowered’ to confront urban problems.

Arkansas Gov. Bill Clinton toured burned-out blocks of Koreatown and South-Central Los Angeles on Monday and said the key to recovery would be “empowering” residents through grass-roots economic development that he characterized as a “third way” between traditional Democratic social programs and Republican “neglect.”

Meeting with community leaders and elected officials on all sides of Los Angeles’ jagged racial divides, the front-runner for the Democratic presidential nomination repeatedly insisted that the federal government must move more aggressively to confront the problems of cities. But he said the government should focus on initiatives to encourage investment in the inner-city, spur the creation of more minority-owned businesses and strengthen community organizations, rather than expanding centralized federal social welfare programs.

“My agenda assumes that the government does not always know what is best or how to do it for the people who live in a community, but we should empower them through economic initiatives, and education and health care,” Clinton said while touring the Los Angeles Regional Food Bank, a nonprofit organization that he cited as a model.

Clinton’s efforts to define the new dimensions of his urban agenda came on the same day that White House Press Secretary Marlin Fitzwater blamed the riots in part on the “failed . . . social welfare programs” of the 1960s.

Clinton both contrasted his program with traditional Democratic approaches and dismissed Fitzwater’s assessment as “the last refuge of the desperate person.”

Republicans, Clinton said, “have been running against the liberal social programs of the 1960s for 25 years and they abolished them in 1981. I mean, you cannot blame ‘60s social programs which have been pummeled out of existence.”

He added: “We have had disinvestment in public and private money in our cities for more than a decade now, and Mr. Fitzwater’s rhetoric cannot erase reality.”

In his meetings, Clinton called for several new federal government initiatives, including an increase in spending on infrastructure, programs to manage the conversion of defense industries into civilian pursuits, new efforts to encourage job training, and the creation of a national health care system.

But he put vastly more weight on programs that would use the tax code and other measures to encourage local initiatives and “personal responsibility”--one of the central themes of his campaign. Among the ideas that Clinton stressed during the day were:

* Encouraging private investment in inner-city neighborhoods through tougher enforcement of federal banking laws and the crea tion of urban enterprise zones.

* Expanding government partnerships with nonprofit organizations to build low-cost housing and deliver other services.

* Expanding a federal tax credit for the working poor, to ensure that “anybody out there playing by the rules ought to be above the poverty line.”

* Reforming welfare programs to increase spending on education and training, and then require recipients to take jobs after two years on the rolls.

* Improving access to capital for minority-owned businesses through the creation of a national network of special inner-city development banks based on one operating in Chicago.

“If you don’t enable people to borrow the money to get into businesses in the neighborhoods where they live, it’s hard to have any fundamental change,” he said while standing with Rep. Maxine Waters (D-Los Angeles) outside a burned-out corner on Vermont Avenue.

Along the same line, Clinton said city officials should ensure that the rebuilding effort provides jobs for inner-city residents, and becomes a vehicle for large-scale job training of the unemployed.

Clinton delivered that message insistently during a day that began with a visit to a firehouse in South-Central Los Angeles. Later, he walked through a riot-torn block in Koreatown with City Councilman Mike Woo, met with a group of African-American community leaders at the home of Waters, toured the devastated blocks nearby, held a lunch-time forum with representatives of the United Neighborhoods Organization, the South-Central Organizing Committee and other community organizations. Clinton later met briefly with Mayor Tom Bradley.

Several of those who met with Clinton said they were impressed, but it was clear through the day that he continues to walk a fine line in his response to the upheaval, as he seeks to express understanding of the despair in the black community, without condoning the riots that followed the not guilty verdicts in the Rodney King beating trial.

Clinton has sharply condemned the rioters--a position neither Waters nor many others at her home have embraced. “To call these people hoodlums, that’s not so,” said Rev. Frank J. Higgins, president of the Baptist Ministers’ Conference of Los Angeles/Southern California, after leaving the meeting with Clinton.

In several speeches last week, Clinton stressed “personal responsibility” among the poor, arguing that government programs would not work without efforts to rebuild cultural values in inner-cities where “there is the disintegration of family and neighborhood.”

In Los Angeles on Monday, he put much less emphasis on that so-called “culture of poverty.” Instead, he stressed an argument much less controversial for his audiences: that government programs should be reformed to maximize participation at the grass-roots.

Clinton reinforced that argument by strongly urging that local activists be given a loud voice in the Los Angeles rebuilding project to be headed by Peter V. Ueberroth.

Clinton did not criticize the appointment of Ueberroth--who some minority leaders view with suspicion despite his promises of extensive local involvement.

But, shortly after meeting with a large group of African-American community activists at Waters’ home, Clinton said: “I’m convinced how this is done is important, just as what is done is important. The people here believe they have been shut out of the decision-making process. Now there is a new process, there is a new plan that is going to be developed. (And) the people who were in the congresswoman’s house are the people who ought to be listened to in the rebuilding.”

Shortly before he left Los Angeles, Clinton said he left a message for Ueberroth and wanted to report to him on what he had learned in his meetings with community organizations.

Times political writer Cathleen Decker contributed to this story.