American Notes FOREIGN AID

When Panama and Nicaragua took their dramatic turns toward democracy with more than a little push from the U.S., President George Bush declared that both needed aid from America to rebuild their economies. But he did not say where he would find the money. As Congress seemed to dawdle over the problem, Bush last week said funds could be diverted from the military. If Congress agrees, this would be the first budgetary dividend from the global moves toward peace.

Calling the aid a "Fund for Democracy," Bush said Nicaragua should get $500 million and Panama $570 million. To pay for it, the Pentagon would postpone projects at Fort Ord, Calif., Fort Knox, Ky., and Fort Hood, Texas, delay repairing the damaged battleship Iowa and use savings from a hiring freeze. Bush said Congress should vote the aid package by April 6. It is expected to do so, but only after enlarging the pot. Since the President has opened the military vault, Congress presumably will look for the extra cash at the Pentagon.