Bush Demands Latin Aid Action : Legislation: He says Nicaragua is ‘bankrupt.’ Lawmakers are denounced for using the assistance measure as a vehicle for other ‘goodies.’

WASHINGTON —  Saying that “the situation in Nicaragua is critical” and that the government of Violeta Barrios de Chamorro is “absolutely bankrupt,” President Bush demanded Wednesday that Congress remain in session through the Memorial Day vacation, if necessary, to finish work on an emergency aid package for Nicaragua and Panama.

“We must not let the procedural gridlock in Congress destroy the hopes of freedom,” Bush declared in a news conference. He denounced lawmakers for stalling two months and using his $800-million aid request as a vehicle to carry more than $2 billion in unrelated spending programs.

House and Senate negotiators worked through the day trying to break the logjam over the bill, but they warned that despite some progress, work may not be completed before next week.

White House officials said that the fate of their emergency aid request for two embattled Central American nations encapsulates everything that is wrong with the current budget process.

“Congress has toyed with this bill,” White House spokesman Marlin Fitzwater said earlier this week. Lawmakers have “piled on to get the last ounce of goodies out of this because they know it’s something that’s urgently needed.”

In other comments at his press conference, Bush:

Said that he sees “no reason to be encouraged” that prospects for freedom have improved for six Americans held hostage in Lebanon.

Warned the Philippines that U.S. bases there are “not something that is absolutely essential to the United States.”

“Those are great facilities,” Bush said, referring to the Subic Bay Naval Base and Clark Air Base, “and we will negotiate in good faith” over renewing U.S. leases. But, he added, “we don’t have a total blank check regarding this.”

Bush’s statement backed up the tough negotiating line that the Administration has taken in talks over the future of the bases, warning Philippine leaders that if they demand too much in return for renewing the base leases, the United States can make a better deal elsewhere.

Repeated his opposition to a bill that would guarantee workers unpaid leave for child care and family emergencies. The bill has been a major goal for women’s organizations and has been backed by many Republicans.

“I think it boils down to the concept of whether you are in favor of mandated benefits or not,” Bush said. “I’ve been quite open with my concerns about that.”

On aid to Nicaragua and Panama, White House lobbying escalated sharply early this week when Chamorro sent Bush an urgent appeal for aid after a wave of strikes paralyzed much of her government. The strikes are led by public employee unions dominated by Nicaragua’s left-wing Sandinistas.

American officials had strongly backed Chamorro during the campaign leading up to February’s election, in which she defeated Sandinista leader Daniel Ortega. Her ability to obtain U.S. aid had been a major theme of Chamorro’s campaign.

Bush asked aides to investigate whether he could give Chamorro’s government a $40-million loan or arrange for private banks to lend Nicaragua money, but on both counts he came up empty-handed. Nicaragua has virtually no foreign currency reserves and would be unable to repay a loan unless the current aid bill passes. Government lawyers advised Bush that neither the Treasury nor private sources would be able to lend money in those circumstances.

“Our hands are tied, and I can’t provide a loan anchored on legislation which is not assured,” Bush said.

The deadlock over Central America aid started as far back as Jan. 25, when Bush first requested $542 million in aid to Panama. Congress approved the first $42 million but held up the rest. Two months later, on March 13, Bush asked for $300 million for Nicaragua and asked Congress to pass the total $800 million package by April 25, in time for Chamorro’s inauguration.

Ever since, the aid request, packaged as an “emergency supplemental appropriation,” has become a political football and a classic example of the almost irresistible urge by congressmen to load extra spending onto “must-pass” legislation.

And members of Congress have been resisting Bush’s pleas that the aid is an urgent matter. “Nobody is screaming in my district” about aid to Panama and Nicaragua, said Rep. David E. Bonior (D-Mich.).

By now, the bill has swollen to more than $3 billion, including hundreds of millions of dollars to repair damage from earthquakes, oil spills, hurricanes, tornadoes and floods this year and last, more millions to fight Western forest fires and $110 million to help the Census Bureau finish the decennial head count.

Administration officials concede that some of that spending is needed but object to its being loaded onto the Central America bill. Other provisions, they say, are simply old-fashioned pork.

One amendment to the bill, for example, would spend $185 million to build an FBI fingerprint laboratory in West Virginia, home state of Democrat Sen. Robert C. Byrd, the Senate Appropriations Committee chairman.

Byrd’s counterpart in the House, Appropriations Committee Chairman Jamie L. Whitten (D-Miss.), would like to keep some jobs in his state as well. His plan involves using the emergency bill to spend up to $90 million to keep open an Army ammunition plant in southern Mississippi.

Other provisions in the bill include $7 million to fight grasshoppers in the upper Midwest; $756,000 for new parking spaces for the Senate; $10 million to build a new U.S. Embassy in Lithuania if the Administration ever recognizes Lithuania as an independent state, and an undetermined amount to donate a government-owned barge to American Samoa and transport it to Pago Pago.

Other hang-ups have been two unrelated provisions concerning the District of Columbia. One, sponsored by conservatives, would reinstate the death penalty in the city, over the objections of the city government. The second, sponsored by liberals, would allow the city to use its own funds to provide abortions for poor women.

Bush has said repeatedly that he will veto the bill if it carries the abortion language. Congressional negotiators predict that both the death penalty and the abortion provision eventually will be dropped.

A final hurdle involves U.S. aid to El Salvador, to which the Nicaragua and Panama aid has been linked by House procedures. Democrats are hoping to use the tie to force the Administration to accept restrictions on Salvadoran aid.

Times staff writer Michael Ross contributed to this story.

NICARAGUA ACCORD--A paralyzing strike by public employees is settled. A14