The Reagan administration lost a round in its plans to aid El Salvador economically Tuesday as two House subcommittees sharply reduced that country's share of funds in the new Caribbean Basin plan.
The two Foreign Affairs subcommittees voted to keep any one of the 28 Caribbean countries from receiving more than $75 million of the $350 million in the package.
The administration, citing El Salvador's economic plight and a leftist insurrection there, had proposed giving that country $128 million, more than a third of the total.
The votes in both subcommittees reflected criticism that the State Department is using the Caribbean plan as a device for funneling more money into El Salvador at a time when regular foreign and military aid for that country is under strong attack in Congress.
The cutback in the Salvadoran portion drew a strong objection from the State Department. Deputy Assistant Secretary Stephen Bosworth said it would jeopardize U.S. efforts to support the new government there at a time when "it is trying to establish democratic institutions" and make social reforms.
Besides voting the reduction on El Salvador, the subcommittee on international economic policy and trade made major changes in the Caribbean Basin plan, insisting that one-fourth of the money be used for traditional economic development purposes such as health, education and infrastructure.
The administration had wanted to use the entire $350 million to provide credit for private companies and to ameliorate the Caribbean countries' balance of payments deficits.
Bosworth opposed the change in direction, saying that those countries need credit for private development and help in reducing payment deficits. Conventional economic development money is available through other foreign aid programs, he told the committees.
The administration's plan already has been battered by a House Ways and Means subcommittee which, under protectionist pressures, exempted several industries from the duty-free privilege offered in the original bill.
Tuesday's agreements to cut El Salvador's portion were the first substantive congressional votes on U.S. policy there since elections in March resulted in the ascension of right-wing parties.
The new regime's policies were not debated, however, and the main issue was the administration's plan to give Salvadorans such a large slice of the total pie.
Rep. Michael D. Barnes (D-Md.), chairman of the inter-American affairs subcommittee, called the administration's emphasis on El Salvador a "political liability" for the whole package and noted that several witnesses recently called the Caribbean plan a "front" to shovel money into that country while only minimally helping other countries in the region.