Clinton Plan Seen as Both Boon, Bane for California : Economy: Key Congress members predict state will get fair share of ‘investments’; cuts will also affect jobs.

Proposing plenty of both help and hurt for California, President Clinton’s economic plan could bring at least 50,000 new jobs and about $3 billion in short-term spending to the state but also wipe out more military bases, defense and aerospace contracts, according to Administration officials and the state’s congressional leaders.

While the precise impact on the state will only emerge in coming months, key legislative leaders said California would receive a fair portion of the $160 billion Clinton proposed to pour into “investment” programs aimed at improving the national economy over the next four years.

“The President has a real desire to put a California economic strategy in place,” said Rep. Vic Fazio (D-West Sacramento), a prominent member of the House Appropriations Committee who has spoken with Clinton about the state’s financial woes. “He also wants to make California a place he can call his political base.”

Clinton specifically mentioned providing assistance to South Los Angeles and the aerospace industry Wednesday during his economic address. Apart from its economic plan, the White House this week arranged for $60 million in economic development funds to be sent to Los Angeles.

At the same time, California is likely to shoulder a disproportionate share of the $496 billion in tax hikes and spending cuts proposed in the Clinton plan. California will lose jobs from more defense reductions and the state could lose as much as $5 billion in contracts and 4,200 jobs if Clinton’s cutbacks to the space station are approved.

California also can expect to receive only half of the $1.45 billion in immigrant funds that Gov. Pete Wilson is counting on to help balance next year’s state budget, Fazio said.

Moreover, the President’s plan to collect more than $100 billion in higher income taxes from the wealthiest 1.2% of taxpayers would disproportionately impact the state. California is home to 16% of the nation’s 1990 individual tax returns that show more than $200,000 in adjusted gross income, according to IRS statistics. California has about 12% of the U.S. population.

“The tax increases will slow down the economy and end up throwing more people out of work,” said Rep. Ed Royce (R-Fullerton). He voiced special concern about the effect of a $71.4-billion energy tax, which will be based on the heat content of fuels such as petroleum, natural gas, coal and home heating oil. “This plan is particularly tough on California because we have a commuter-oriented society,” Royce said.

In an appearance Thursday before the Senate Budget Committee, Treasury Secretary Lloyd Bentsen said that the Administration’s short-term stimulus plan would generate at least 50,000 jobs in California through highway construction, summer youth employment programs and other public works projects.

Bentsen said portions of the Clinton blueprint are designed for California.

“The space industry and high technology that you have so much of in California will be particularly interested in investment tax credits and the permanent extension of research and development tax credits,” Bentsen said in response to a question by Sen. Barbara Boxer (D-Calif.). “Those hit home.”

Under the Clinton proposal, California would get $4.6 billion in new money over four years to assist thousands of workers who lost defense-related jobs and $3 billion to ensure the state maintains its lead in energy technology, Boxer said. Within the next year, the state would receive $2.4 billion to extend unemployment benefits and $330 million in new highway and transit funds.

Los Angeles, in particular, stands to benefit if Clinton’s short-term stimulus package is approved by Congress. It would provide the city $49 million in federal grants for public works and parks projects, according to the Clinton Administration.

Housing and Urban Development Secretary Henry G. Cisneros already has decided to immediately send $60 million in available economic development funds to help launch small businesses in riot-torn areas of South Los Angeles, said Mayor Tom Bradley.

“You can’t ask for faster action,” Bradley said after meeting in Washington Wednesday with Cisneros and Sen. Dianne Feinstein (D-Calif.). “It’s most encouraging. There are now so many people in Washington who have been mayors in their prior lives who understand the problems of the cities in this nation and who are responsive.”

Los Angeles was cited twice by Clinton during his speech to Congress. The President said he “especially” wanted to emphasize the importance of Congress quickly enacting a jobs package to rebuild the country’s infrastructure and employ youths “after the events of last year in Los Angeles and the countless stories of despair in our cities.”

Later, Clinton said he wanted to pump $1 billion into enterprise zones “to bring new hope and new jobs to storefronts and factories from South Boston to South Texas to South Central Los Angeles.”

Rep. Maxine Waters (D-Los Angeles) said she thanked Clinton after the speech for mentioning South Los Angeles. She called the tax increases “tough medicine,” but said the job training, summer youth employment, public works, Head Start and other programs in the package will help her South Los Angeles district overall.

“I do think they can see hope in this,” Waters said.

Reaction to the Clinton proposals from the California delegation split along partisan lines.

“He made it very clear to the people of California that (his plan) is a balanced and sobering prescription for a change in direction,” said Rep. Lynn Schenk (D-San Diego). “Personally, I would like to see more spending cuts. But the real point here for California is that only in Hollywood and the movies can you get something for nothing.”

Sen. Feinstein said: “We need that stimulus in California because unemployment is unacceptably high in six large Southern California counties. I think this plan works to California’s advantage--not overnight but in the long run.”

Rep. Randy Cunningham (R-San Diego) added: “The problem isn’t that families are undertaxed. Congress overspends. And Clintonomics fails to discipline spending.”

Among the unspecified cuts California would feel is the closing of military installations. With dozens and possibly hundreds of bases likely to be shut in a new round of closures, California is virtually certain to be hit. In 1991, then-President George Bush approved the closing of seven military bases in California.

Another area in which the state is certain to get squeezed is reimbursement for federally required services to immigrants. During a recent visit to Washington, Gov. Wilson persuaded the California congressional delegation to go to bat for $1.45 billion in immigrant funds that he contends is owed to the state.

But only half of the money will likely be approved, congressional leaders say.

In a letter sent to Wilson Thursday, Rep. Robert T. Matsui (D-Sacramento) and Rep. Henry A. Waxman (D-Los Angeles) warned that $774 million of the money the governor is seeking is unrealistic because it would require sweeping changes in federal laws and would cost the U.S. government more than $2 billion annually over the next five years to pay the same reimbursement levels to other states.

“It is just not going to happen,” Matsui said.

Times staff writers Gebe Martinez and Robert W. Stewart contributed to this story.