House Votes More Aid to Poles, Hungary : East Bloc: Congress worries that democratic reforms in the two nations will fail unless the economies get help.

WASHINGTON —  The House voted overwhelmingly Thursday to provide $838 million--or nearly twice what President Bush requested--for economic aid to Poland and Hungary over the next four years.

The measure, which passed 345 to 47, reflects a strong consensus in Congress that the current movements toward democratization in Poland and Hungary will fail unless the economies receive substantial assistance from the West. The Senate has not yet acted on a measure providing assistance to Poland.

Although Democrats in Congress have frequently accused Bush of timidity in recommending too little assistance for Poland and Hungary, the House measure had strong bipartisan support, and Bush was not criticized during the debate. The President recently has indicated he would sign a spending measure of that magnitude.

The House, on voice votes, adopted two amendments to the bill that were offered by California Rep. C. Christopher Cox (R-Newport Beach). One creates a mechanism for American citizens to directly invest in Polish businesses, and the second establishes policy objectives for the foreign aid package.

When Bush visited Eastern Europe in July, he announced an aid package of $119 million for Poland and $31 million for Hungary. But in response to criticism from Democrats, the President later beefed up his request, finally bringing it to a total of about $452 million.

Most members argued for the assistance package on grounds that economic and political reform must succeed in Poland and Hungary if it is to spread throughout Eastern Europe. They warned that these countries will likely return to repression if reform fails.

“The free-market system has a golden opportunity to prove itself,” declared Rep. Henry Hyde (R-Ill.) “We dare not fail, and they dare not fail.”

Rep. Stephen J. Solarz (D-N.Y.) and others said the reforms will fail without assistance because the economies of Poland and Hungary are seriously troubled.

Inflation in Poland is running at an annual rate of 200% or more, and essential food products are scarce. In Hungary, there was virtually no economic growth last year, when prices rose 18% and consumer purchasing declined 3%.

Only two House members spoke against the assistance for Poland and Hungary. Rep. Philip M. Crane (R-Ill.) cautioned that Communists still hold substantial power in both countries. Rep. James A. Traficant Jr. (D-Ohio) argued that the money should be used to solve domestic problems, such as the devastation caused by Tuesday’s earthquake in Northern California.

“Why don’t we cut this in half and send the money to the American people on the West Coast who need it?” asked Traficant.

But proponents of the measure argued that the success of democratic reforms in Eastern Europe will ultimately save the United States money.

House Majority Leader Richard A. Gephardt (D-Mo.) noted that Washington spent about $1 trillion over the last decade to defend the West against the Warsaw Pact, the defense alliance of the Soviet Bloc. He predicted that U.S. expenditures for a NATO defense in the 1990s could be cut if reform succeeds in Eastern Europe.

The House-passed measure contains $200 million to help stabilize the Polish economy--far less than the $1 billion requested by the Polish leadership for a currency-stabilization fund. Among other items, the money could be used for balance-of-payments assistance and for private-sector development.

It would provide for creation of two nonprofit organizations to promote development of the private sector in Poland and Hungary.

One of the Cox amendments would permit these organizations to solicit private investments from citizens and businesses in the United States and to return profits to the investors. The fund managers would invest the mix of private and government money in potentially risky business start-ups in Poland and Hungary.

Under another provision of the bill, the Labor Department would receive $5 million over three years to provide technical assistance to Poland and Hungary on labor-market reforms.

The President would be authorized, although not required, to spend more than $125 million on food aid for Poland in the current fiscal year.

Times staff writer Robert W. Stewart contributed to this story.