New Orleans Betrayed

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Sunday, January 29, 2006

IN FRONT OF the cameras last September, President Bush promised to rebuild New Orleans. In private, White House officials told Louisiana's notoriously argumentative politicians -- Democrats and Republicans, state and local -- to get their act together and come up with a reasonable plan, one that would neither cost too much nor result in people rebuilding in flood-prone districts. To many people's immense surprise, they did. In consultation with the Urban Land Institute, New Orleans Mayor C. Ray Nagin (D) proposed a logical reconstruction of his city, with buildings on higher ground to be rebuilt first. Rep. Richard H. Baker (R-La.) proposed legislation to set up a Louisiana Development Corp., with sufficient capital to buy back damaged property, allow owners to move to higher, drier ground as the mayor's plan dictated and let the state redevelop lower, wetter property as appropriate.

After much agonizing, state politicians from both parties agreed to back these ideas. Not everyone in New Orleans liked them, and the mayor himself sometimes seemed reluctant to defend them, but federal government support would have helped convince people there was no other option. Until last week, the administration was assuring Louisianans, behind the scenes, that they were on the right track.

Now -- suddenly -- the administration has switched directions. Early last week White House officials told Mr. Baker and other Louisiana politicians not only that they refused to support the development corporation he proposed but that they'd asked congressional leaders to cancel planned hearings on the Baker bill. At his news conference last week, Mr. Bush claimed, strangely, that "the plan for Louisiana hasn't come forward yet." Was he misinformed or deliberately misleading?

Donald E. Powell, the administration's point man on the Gulf Coast, has announced that all reconstruction money will instead be funneled to the Gulf through the traditional method of block grants, $11.5 billion of which Congress allocated last month. Already, Mississippi Gov. Haley Barbour (R) has said he intends to use his $5.3 billion of grant money to compensate the 35,000 Mississippi homeowners who, technically located outside the flood plain, were not required to have flood insurance but got flooded anyway. Although this program was criticized last month by some White House officials on the grounds that it creates a "moral hazard" -- encouraging people who live near coasts not to buy insurance and discouraging them from rebuilding in safer places -- this is the model that Mr. Powell, in another about-face, now says he supports for Louisiana, too.

But it can't be a solution for New Orleans. Given the larger number of flood victims and the more extensive damage, Louisiana's $6.3 billion will not go far enough. Nor will money alone solve the problem of the hundreds of acres of flooded neighborhoods or encourage people to rebuild in safer locations.

Louisiana politicians are now starting from scratch. Some are working on an alternative to the Baker bill, such as a mechanism to borrow money to set up a smaller development entity. This time, the administration should work closely with them and communicate its intentions clearly. Mr. Powell's job is supposed to be one of "coordination," not "transmitter of mixed messages." Without some mechanism to buy back land, the reconstruction of New Orleans will be slower and less rational -- if there is any reconstruction at all.


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