House Readies Compromise $1-Billion Urban Aid Bill : Congress: Bush is expected to sign the measure assisting L.A. riot victims, creating 360,000 summer jobs for youth.

Unable to muster the votes for a $2-billion emergency urban aid package, House Democratic leaders cleared the way for passage today of a compromise $1-billion measure to assist victims of the Los Angeles riots and establish a jobs program in urban areas this summer.

If passed by the House, as anticipated, the measure is expected to get swift approval in the Senate and be signed into law by President Bush, who had threatened to veto the larger $2-billion allocation.

White House Deputy Press Secretary Judy Smith said that the Administration is encouraged that “we seem to be making progress.”

Sen. Edward M. Kennedy (D-Mass.), who had been a chief advocate of the $2-billion package, endorsed the compromise, saying it signified that “the logjam is finally breaking and an emergency aid bill can be signed into law in time to make a significant difference this summer.”

The money for summer jobs would nearly double the current federal youth jobs and job training program and would create 360,000 summer jobs for young people, he added.

Sponsors said that, although the bill does not strictly earmark money for Los Angeles, it would replenish the accounts of the Small Business Administration and the Federal Emergency Management Agency, which already have begun helping businesses rebuild.

In addition, sponsors said that Chicago, which suffered recent flood damage, would receive an unspecified part of the funds.

The revised legislation eliminated $250 million for a summer Head Start program, another $250 million for education aimed at inner-city neighborhoods and $250 million for a “weed and seed” anti-crime program. It reduced summer job funds from $675 million to $500 million.

Under the compromise, the bill would provide:

--$169,650,000 for SBA disaster lending, primarily for Los Angeles and Chicago, which is expected to generate loans totaling $500 million.

--$70,325,000 for SBA’s direct business lending, generating loans totaling $1.45 billion.

--$300 million in disaster relief, to be administered by the Emergency Management Agency.

--$500 million for summer youth employment, with $100 million earmarked for the 75 largest cities and $400 million to be distributed under an existing federal formula.

--A $5 million micro-loan demonstration program and $4 million for SBA technical assistance grants, as well as $27 million for administrative expenses for the SBA.

--$5.5 million for hiring and training of violent crime task forces and for increased costs related to the Los Angeles riots and $1.5 million for a federal law enforcement training center. The House originally approved a $495-million bill to provide small business loans and disaster relief payments to Los Angeles and Chicago. In the Senate, however, a bipartisan coalition added another $1.5 billion for summer jobs, summer Head Start and “weed and seed,” a Bush Administration crime-fighting program.

A Senate-House conference approved the Senate’s $2-billion figure, but the higher amount ran into surprising opposition from rank-and-file Democrats in the House who apparently wanted to demonstrate a commitment to budget austerity in this election year.

“We were 42 votes short (of passage) among Democrats,” Rep. Julian C. Dixon (D-Los Angeles) told reporters, explaining why the smaller, $1-billion legislation was cleared Wednesday by the House Rules Committee for a floor vote today.

Rep. William H. Natcher (D-Ky.), acting chairman of the House Appropriations Committee, said that the compromise legislation would be supported by Senate leaders and is acceptable to the Bush Administration.

“We just decided we’d better get the money out,” Natcher said, explaining the unusual cutback in the amount of funds following agreement on a higher figure in a Senate-House conference committee last Friday.

The House’s approval of the $495-million emergency urban appropriation on May 14 by a 244-192 vote came over surprisingly strong opposition. Adoption in the Senate of the $2-billion package occurred by a 61-36 margin.

Since then, however, the debate over a balanced-budget amendment to the Constitution put many members of Congress on record in favor of major reductions in spending to cut the soaring federal deficit.

In addition, the Democratic leadership has signaled that it will push for major cuts in appropriations bills this year, partly in response to public anger over government’s apparent inability to curb its red-ink spending habits.

As a result, every spending measure coming before Congress this year is expected to get unusually close scrutiny and may be trimmed by austerity-minded lawmakers.