Senate OKs Extension of Benefits for Jobless : Congress: Measure would help California’s long-term unemployed. Upper house also passes NAFTA, 61-38.

Acting on two major measures with economic implications, the Senate on Saturday approved an extension of jobless benefits for long-term unemployed workers in California and other states and endorsed the North American Free Trade Agreement to officially end a clamorous congressional struggle on this issue.

The $1-billion unemployment measure, one of the last to pass before the Senate adjourns for the year, sailed through on a 79-20 vote and was sent to the House, where final congressional approval is expected on Monday. President Clinton had requested the extension.

Under its provisions, workers in California and four other economically distressed states who exhaust their 26 weeks of regular benefits would be eligible for another 13 weeks of payments. The bill would authorize another seven weeks of benefits for idled workers in all other states. All of the payments would be retroactive to Oct. 2.

NAFTA was approved 61 to 38, with Senate Republicans supplying the majority of support. It now goes to Clinton for his signature and awaits further procedural action in Mexico and Canada.

Both congressional moves were welcome news for the Clinton Administration, but the White House was diverted trying to head off a serious challenge that could dampen any sense of triumph in the session-ending business.

On Saturday, the Clinton Administration proposed a plan to slice another $37 billion from the federal budget over the next five years, in the hope of drawing congressional support away from a far broader deficit-reduction package scheduled for a vote in the House on Monday.

Administration officials contended that approval of the bigger budget-cutting plan could badly damage the President’s health care reform initiative, the next major step in his agenda and the largest single undertaking of his presidency.

Clinton, in Seattle at the Asia-Pacific Economic Cooperation meeting, said that the Penny-Kasich bill--named after its House co-sponsors, Minnesota Democrat Timothy J. Penny and Republican John R. Kasich of Ohio--”would make national health reform impossible.”

The revival of the unemployment benefits measure reflected the varying pressures in Congress between helping the victims of recession and economic dislocation and avoiding worsening the problem of the federal deficit. The bill earlier had been deadlocked over demands for new cost savings from reduced federal employment.

Sen. Phil Gramm (R-Tex.) pressed again Saturday to amend the plan to lock in a reduction of 252,000 in the federal work force over the next five years.

Gramm said his amendment--carrying out a proposal by Clinton that was included in his “reinventing government” program--would save taxpayers $21.8 billion over the next half-decade. Opponents, however, said those projected savings already had been spent by the Senate when it approved a $22-billion crime bill last week.

Senate Majority Leader George J. Mitchell (D-Me.) termed Gramm’s amendment a “cynical farce” and “phony” since the funds could not be spent twice.

Eager to approve the extra jobless benefits and go home, the Senate rejected Gramm’s amendment 63 to 36. Under congressional rules of procedure, the unemployment benefits bill will be presented to the House on a take-it-or-leave-it basis, without any possibility of amendments. It is expected to pass.

The Clinton budget-cut plan unveiled Saturday would cut spending beyond the reductions included in the Administration’s economic plan that passed Congress in August. The new cuts include the federal job force reduction but would avoid the larger, and more painful, reductions in Medicare and other programs that have been proposed by the bipartisan group in the House. Their plan calls for slashing more than $90 billion from the deficit over five years.

That Penny-Kasich proposal is scheduled for a vote Monday, and Clinton Administration officials are lobbying furiously to defeat it. The White House argues that the bill would hamstring Clinton for the rest of his term in office, making it difficult for him to fund new domestic initiatives like job training, or even to pay for the changes in his health care reform plan.

The White House strategy calls for offering a smaller package that would allow lawmakers to vote for deficit reduction without voting against the President.

The Senate, in another eleventh-hour action Saturday, narrowly authorized the Resolution Trust Corp. to use up to $18.3 billion for dealing with failed savings and loan associations between now and Dec. 31, 1995, when the RTC is scheduled to go out of business. The 54-45 vote sent the measure to the House for final congressional action.

* QUIET END TO DEBATE: National debate on NAFTA ends with little flourish as Senate approves pact. A18