The House yesterday defeated an attempt to override Reagan administration policy and push Poland into default on its loans before using government funds to pay off the bankers who lent the money.
The congressional test on the administration's handling of the Polish situation came on a motion by Rep. Jerry Lewis (R-Calif.) on a bill to increase by $5 billion the pool of funds available to the Commodity Credit Corp. to run U.S. farm programs.
The U.S. banks would be paid out of CCC funds. Lewis wanted to forbid payment without a declaration of default. Critics say that the Polish government should be pushed to the wall as a penalty for its imposition of martial law.
Lewis' motion was easily defeated, 256 to 152. But the emotional tenor of the debate and the sizable bipartisan showing in favor of the default proposal made it clear that Poland has emerged as a significant political issue this election year, though one that does not break down by party label.
Thus last night Sen. Daniel Patrick Moynihan (D-N.Y.) introduced an amendment in the Senate that also would prevent the additional CCC funds to be used for paying the private banks unless a default had been declared.
The 152 House votes in favor of overturning administration policy went against the Republican and Democratic leaderships, which both supported the president.
The administration has argued that it would be counterproductive to push Poland into default. That is why the president authorized the CCC, the Department of Agriculture's bank, to pay private banks $71 million in interest and principal owed by Poland in January but unpaid. These loans, which were for buying grain and other farm products in the United States, were guaranteed by the government.
In authorizing the payments the administration waived a requirement that the banks declare Poland in default before the guarantees became operative. A default declaration would have resulted in the seizure of Polish assets here and abroad and a chain reaction of similar declarations by European banks.
Yesterday officials from the State, Defense, Treasury and Commerce departments told several congressional committees that the administration action kept alive the possibility that Poland would repay its debts eventually.
Fred C. Ikle, undersecretary of defense for policy, told the Senate Appropriations Committee that the president's decision was a "prudent approach" that left open the possibility of a default as an option later.
Lewis' motion would have sent the CCC legislation back to committee and, in effect, held it hostage to a much tougher administration stance.
Rep. Silvio O. Conte (D-Mass.), in opposing Lewis' motion, read a State Department letter saying that the proposal would set back efforts to put maximum pressure on the Polish regime and risk causing a serious rift with European allies who oppose throwing Poland into default.
Rep. Henry S. Reuss (D-Wis.) described the military regime in Poland as a "disgusting communist government," but said a default declaration would be "tough on the children of Poland" because of the cutoffs of food and economic relations with the West that would be certain to follow.
Reuss accused hard-liners who favored a drastic American response of "playing fast and loose with the future of the world."
However, Lewis contended that the administration policy "bails out the banks," while allowing the Soviet bloc to build up its military machine.
During the day administration officials indicated in a number of ways that division between the allies over sanctions, as well as divisions within the administration over the issue, had not been resolved.
Still under study at the highest level are possible new steps to delay or block construction of the $25 billion Siberian natural gas pipeline to Western Europe.
At issue is whether the United States has legal authority, or power, to prevent European companies under contract to provide crucial pipeline equipment from going ahead with their plans. A decision on how far to push the sanctions question is due in a few days, according to Undersecretary of Commerce Lionel H. Olmer.
Testifying before a subcommittee of the House Committee on Science and Technology yesterday, Deputy Assistant Secretary of State Ernest B. Johnson Jr. said the administration has "not gotten as much as we'd like from the allies , but we continue to work on it."
Johnson said that the United States, by itself, "cannot markedly reduce the volume or increase the cost of Soviet energy production." But Deputy Assistant Secretary of Defense Stephen D. Bryen took a more optimistic view. He said that U.S. sanctions alone could delay the pipeline from two to five years.