UC Vote Places Money to State at Risk, Panetta Says : Affirmative action: White House aide says U.S. to review funding, calls decision to end race-based preferences ‘a terrible mistake.’ Wilson terms cutoff threat ‘pathetic.’

White House Chief of Staff Leon E. Panetta said Sunday the federal government will review California’s eligibility for federal funds in the wake of the vote last week by the University of California Board of Regents to eliminate race as a factor in hiring and admissions.

Panetta branded the regents’ decision “a terrible mistake” that “is really going to set the state back.”

It was unclear whether Panetta was referring to all federal resources, which could run well into the billions of dollars, or just those related to education, such as research grants to the UC system.

Panetta, appearing on CBS’ “Face the Nation,” added: “Obviously, we’re going to be reviewing our contract laws and the provision of resources to that state.”

The possibility of federal funding cutoffs came as a surprise because on Friday, Justice Department officials indicated that, based on the Supreme Court’s decision last month on affirmative action, they lacked authority to stop the regents’ action.

Gov. Pete Wilson, calling Panetta’s comments “pathetic,” said in a statement issued Sunday that Washington can’t legally cut off funds. “Once again, the Clinton Administration is abusing power and engaging in threats and intimidation,” the 1996 GOP presidential contender said. “Their threats to withhold grants and contracts to force the regents to continue racial discrimination in contracting and admissions is an arrogant, gross abuse of power.”

Throughout the day, on successive TV news talk shows, Wilson and the Rev. Jesse Jackson hammered away at each other over affirmative action and politics.

Wilson also said: “We are not going to give in to White House extortion acting yet again through the most flagrantly politicized Justice Department in history.” If the department moved to block the regents’ action or cut off state contracts and grants, he said, he would fight the move on two fronts--in court and in Congress.

And it is still unclear what the potential effect of the decision to bar race and gender considerations in school admissions, hiring and contracting might be. The board specifically exempted any changes that would lead to “a loss of federal or state funds for the university.” A spokesman for Wilson said the governor doesn’t consider the exemption an issue because he believes the regents’ actions are squarely in keeping with recent Supreme Court decisions on affirmative action.

UC is the nation’s first college system to formally abolish race-based preferences in student admissions. A study by UC officials, commissioned by the regents, showed that such a move could reduce the number of African American students by up to 50%.

Last week, President Clinton delivered an impassioned defense of affirmative action, instructing federal agencies to continue their policies but also pledging to end preferences or quotas for unqualified candidates.

California Democratic Assembly Leader Willie Brown said in an interview that the Justice Department review “is an appropriate thing to do. I’m sorry to see the regents of the University of California become the lead in trying to undo years and years of the efforts that this country has made to extend equal opportunity to sons and daughters and granddaughters of ex-slaves.”

If the Justice Department found a violation of laws, he said, he would favor sanctions, including cuts in contracts and grants to the state.

Wilson, appearing from Sacramento on ABC’s “This Week With David Brinkley,” said such threats “are rather pathetic. They will certainly not sway me.” The governor, whose stance on affirmative action has attracted attention to his presidential bid, renewed his attack, saying affirmative action “is in fact racial preferences, racial discrimination. It is wrong, and it is unfair.”

Jackson, who urged the regents to keep affirmative action, said on the same show that affirmative action had become “a scapegoat for economic downsizing that is putting people out of work.”

In a later televised volley on CNN’s “Late Edition,” Jackson said the regents’ action flies in the face of federal laws and Supreme Court decisions, which, he said, still allow universities to use race as one factor in admissions and hiring. He accused Wilson of engaging in divisive politics to further his presidential ambitions.

Wilson retorted that Jackson is also mulling a presidential bid.

Wilson’s stance drew fire from Republicans and Democrats on Sunday’s interview shows. They noted that before he announced his presidential intentions, he had supported many affirmative action programs.

As governor, “Wilson signed into law 21 bills on affirmative action and now is opposed,” said William J. Bennett, a leading conservative Republican who was secretary of education under President Ronald Reagan. Bennett characterized this as “a problem.”

“If this is an immutable principle, one has to explain why one changed one’s mind, and Gov. Wilson . . . is subject to that burden,” Bennett said on NBC’s “Meet the Press.”

Although Wilson talks about racial preferences, Panetta said, “he never says [that] where there is discrimination we ought to correct it. And that’s a fundamental principle in this country. . . . We don’t have to do quotas, we don’t have to do preferences based on unqualified credentials, we don’t have to do reverse discrimination. But, for goodness’ sakes, let us at least use the tools we have to deal with discrimination.”

Wilson brushed aside the allegation that he is merely using the issue for campaign politics, noting that it first was raised at the Board of Regents 18 months ago, “long before I was a candidate.”

Affirmative action is dividing people and “tribalizing America,” he added in one television interview, repeating a phrase that had drawn some of the sharpest criticism.

Rep. Kweisi Mfume (D-Md.) accused Wilson of using “a buzzword. . . . Tribalism is associated with Africa, is associated to people of color, and to say that in that sort of tone in this debate, at least causes one to wonder whether or not he was trying to send a code word,” Mfume said on “Meet the Press.”

On the same program, Sen. Bill Bradley (D-N.J.) said, “I don’t think there’s any question that [Wilson] is stirring the pot of racial turmoil by his actions.”

But Wilson noted that the phrase had been used by historian Arthur Schlesinger Jr., who served in the Kennedy Administration, in his book “Disuniting America.”

In his statement, Wilson said, “We are going to demand policies and practices that are fair to deserving students of all races and ethnicities, not those that impose racial favoritism.”

Ostrow reported from Washington and Nazario from Los Angeles.