Conservatives Call for Tax Breaks to Rebuild Crumbling Inner Cities : Urban policy: The House lawmakers favor ‘enterprise zones’ over social programs. One plan would eliminate business taxes in parts of L.A.

As Congress heads for a showdown over big-ticket aid packages for riot-torn Los Angeles and other American cities, House conservatives are pushing an alternate agenda that stresses urban tax relief instead of massive new spending on social programs.

Many conservatives are rallying behind legislation proposed by Rep. Christopher Cox (R-Newport Beach) that would eliminate for five years virtually all business taxes, including income and payroll levies, in the most devastated parts of the nation’s second-largest city. The plan would apply to Los Angeles only.

Other conservatives support broader, more expensive tax relief packages, such as one proposed by President Bush that would benefit other cities as well. Still others support both plans.

“The best you can expect from pumping hundreds of millions of dollars into the inner city is simply rebuilding the status quo of what was, and that’s not good enough,” said Rep. Dana Rohrabacher (R-Long Beach), who opposes more money for urban social programs, but strongly supports the Cox plan.

“We need to radically change our approach,” added Rep. Henry J. Hyde (R-Ill.)

Bush has proposed legislation to create so-called “enterprise zones” in the nation’s cities and impoverished rural areas. The tax advantages offered under the Bush plan are far less generous than those proposed by Cox, but they would include any major city that meets standards for unemployment and poverty.

The Bush plan would cost an estimated $2.3 billion, while the Los Angeles-specific Cox plan carries no official price tag.

Cox maintains that the cost would be minimal because the designated zones most likely would include neighborhoods that do not have a significant number of existing businesses. Cox and others hope that their measure would attract significant new investment from businesses now located outside of those areas.

The House last month passed a $495-million package of emergency loans and disaster relief targeted largely at Los Angeles and Chicago, which was hit by a devastating downtown flood. Fourteen of California’s 19 Republican House members voted against the bill. The Senate added $1.5 billion to the House package to pay for new initiatives covering summer jobs, schools and neighborhood programs.

Critics suggest that Cox and other conservatives, many of whom represent districts whose residents fled troubled cities years ago, are part of a club of suburban Republicans who have long neglected the troubles of urban America.

The Republican notion that federal social programs don’t work in inner cities “is an ideological answer in search of a premise,” said Bob Brauer, special counsel to Rep. Ronald V. Dellums (D-Berkeley), one of the most liberal members of the House and a strong supporter of aid to the cities.

Tax incentives for business are fine, said Rep. Maxine Waters (D-Los Angeles), who represents the heart of the riot-stricken area, but Congress must do much more--creating paid job-training programs, for example--if it is to address the problems that spawned the riots.

“I’m going to fight very hard to keep an enterprise zone from being a conservative-constructed vehicle by which you help business . . . (but) don’t do anything for the people,” Waters said.

Cox and his supporters insist that enterprise zones and other conservative proposals would do more in a few years to revitalize decaying urban centers and the people who live there than a host of federal social programs have accomplished in the nearly 30 years since Watts erupted in flames.

“If all you want to do is redistribute wealth, we can do that for a time until we run out,” Cox said. “The task, however, should be creating wealth.”

Under the Cox plan, Los Angeles city officials would define the enterprise zones by “green-lining” the areas hardest hit by the riots. Within the zones, Cox would eliminate all federal taxes on businesses. The legislation would not take effect, however, unless the city, state and Los Angeles County eliminated their taxes on business sales, property and income within the zones.

No business would be eligible for the tax benefits unless 90% of its employees were zone residents. The Bush plan would require 30% of the employees to live in the enterprise zones.

Prospects for passage of the bill appear brighter than for most Republican-sponsored legislation, according to congressional aides, largely because Cox is working hard to attract the support of Democrats.

The aides note that liberal Democrats could endorse the plan without abandoning efforts to spend for social programs.

Among the original co-sponsors of the Cox bill is Rep. Craig Washington (D-Tex.), an outspoken black liberal. “This is an idea that can run parallel to the other things we need to do for urban America,” said Washington, who also favors substantial spending on other urban programs.

Rep. John Conyers Jr. (D-Mich.), another prominent black legislator, also has made favorable comments about the legislation.

Cox and Rohrabacher were among the California conservatives who voted against the relief package for Los Angeles and Chicago, which passed the House on May 14 by a much narrower margin than expected.

Despite the conservative misgivings, several social policy experts said they believe federally funded social programs can significantly improve life in the nation’s inner cities.

“The conclusion that social programs don’t work is dead wrong,” said Anthony Downs, a senior fellow with the Brookings Institution, a Washington think tank. “Throwing money at poverty works beautifully,” Downs said, citing the success of Medicare and Social Security programs at reducing poverty among the elderly. “The problem is, we haven’t thrown enough money at it, and not in the most effective ways.”

Margaret M. Weir, an associate professor at Harvard University who is the author of “Politics and Jobs,” a book on federal employment policy, said the government would have to provide substantial funds for job training if companies are to meet the goal of hiring 90% of their workers from inside the zones.

“The idea that they are going to move into jobs that will take them out of poverty simply by setting up an enterprise zone, I think it’s wrong unless there are substantial, real training programs,” Weir said.