THE BATTLE OF NEW ORLEANS

...Unlike direct, onetime grants for home repairs, the LRC money would, by "revolving" so many times, achieve four or five times the bang for the same bucks...

...The third essential point is that both private and public reconstruction efforts have been delayed by federal red tape...

...First, the block grants can't be doled out until HUD finishes its regulations...

...Richard Baker of Louisiana, a little background is in order...

...Even if the reds are at fault, the taxpayers have more than done their duty...

...Cement, steel, and rubber, meanwhile, all flow upriver to the industrial Midwest...

...The Bush language provided that the funds "be subject to the requirements of section 404" of the Stafford Act--which is a FEMA-related section that forbids commercial or residential uses of the land forever...

...They're all correct...

...reasons murky and perhaps uncharitable or even Machiavellian--has opposed with all its might...

...One of the world's great cities is dying before our eyes, yet the Bush administration has actively fought against the very recovery proposal that is the most pro-free market, most pro-private enterprise, most taxpayer-friendly, most accountable disaster-relief legislation imaginable...

...The quasi-independent corporation would be free of most governmental bureaucracy, but it would answer to federal standards...

...Many owners still are waiting for insurance settlements, while others want to rebuild but can't because the Department of Housing and Urban Development (HUD) hasn't yet promulgated the required new regulations...

...Way too much money has been appropriated overall, but far too little has been put to good use...

...It is at this point that many conservatives' eyes start to roll...

...What he alone recognized, and what he developed a solution for, was that devastated southern Louisiana faces obstacles to rebuilding that are uniquely extreme in both kind and scope...

...The administration's explanations have been shifting, misleading, and confused...

...Meanwhile, by buying up whole swaths of property at once rather than waiting on individual property owners to scrape up their own resources, the LRC would jump-start the housing market while bringing back whole neighborhoods at a time...

...To protect taxpayers, the Baker, bill would impose a $30 billion limit for the LRC s borrowing...

...In short, nobody would be exactly "made whole," but at least most people and banks would continued on poge 38 36 THE AMERICAN SPECTATOR APRIL 2006 THE BATTLE OF NEW ORLEANS avoid bankruptcies and collapse...

...The claim that the reds, rather than Mother Nature, victimized Louisianans is not merely a criticism of what is generally acknowledged as an utterly inept response to the storm after it hit...

...Two problems: First, the waiver process is slow, unpredictable, and full of red tape...

...In actuality, just a tiny fraction of the money has been spent," said Eric Stewart of the Commerce Department, who runs the Hurricane Contracting Information Center, in a February meeting at the Mobile Register...

...Worse, as late as the end of January, the Bush proposals would have helped repair only 20,000 of the 200,000 damaged or ruined properties...

...Homeowners would get at least 60 percent of whatever pre-Katrina equity they had in their properties, while the banks would receive up to 60 percent of the outstanding mortgages...

...But when in midFebruary the Baker plan again seemed to be gaining some legislative momentum, the President hustled to stick taxpayers instead with yet another $4.2 billion in Community Development Block Grants (CDBG) for Louisiana, as part of a "supplemental Appropriations" request for Congress to pass in the spring...

...Rep...

...and owners of rental units can't move until there are renters in the market, which can't happen until the economy will provide jobs...

...Never mind that the White House itself is in a flood plain without anybody thinking that West Wing employees need flood insurance...

...This is where Rep...

...The National Journal just ranked him as the 17th most conservative member in the House, and he served as the Louisiana campaign chairman way back when for Bush p~re...

...That's an essential concept, because right now even the most active of redeveloping neighborhoods are subject to what locals are calling the "jack-o'lantern effect," meaning the properties are being refurbished in an almost scary, zig-zag, gap-toothed fashion: one property here, another across the street, a third one catty-corner, and maybe another a block away, while the owners in-between are too broke or otherwise ill-equipped to rebuild...

...Toward that end, the Baker bill would set up a Louisiana Recovery Corporation (LRC) as a "revolving fund" that effectively would use most of the same money over and over again...

...the banks can't move until their cash flows are restored and until government regulations say more loans are safe...

...Finally, of the money that has actually reached victims, most of it supplied short-term needs such as temporary shelter and food...

...But the Bush administration, inexplicably, opposes the plan, and vociferously so...

...Other money just replenished FEMA's coffers for the future, and still other funds are stuck, apparently semi-permanently, FEMA itself admitted that of its first $29.7 billion for 2005 hurricane relief, $7.6 billionmore than a fourth of it-was used for "administration...

...In short, what's supposedly good for New Orleans is the same program otherwise too problematic for the rest of America...

...Its port is the nation's largest by tonnage, the fifth largest in the world, and its health is vital for the health of the farmers throughout America's heartland...

...What's most distressing about the Bush response, and non-response, to Katrina is _ that all the President's promises fi)r a creative new approach to major-disaster relief u s - " " D c 3' PP 34 THE AMFJDCAN SP|CT~TDI~AP~i~g2Htq have gone for naught...

...In many cases, New Orleans' Katrina victims had no flood insurance specifically because they were advised that they needed none...

...And when under fire for his opposition to that plan, the President instead touted yet another scheme to throw more money down an unaccountable rat-hole-and compounded the error by including legislative language that would preclude the very uses of the money for which the President explicitly dedicated it...

...And the fourth crucial fact is that New Orleanians cannot rebuild their own city if they have nowhere to live while doing i t - a n d that if they cannot return to their properties or pay their mortgages, the ripple effects from bankrupt citizens and distressed lending institutions could damage the national economy and require federal payouts far more expensive than the cost of having the government do the work of re-creating the New Orleans housing market from scratch...

...Many liberals think he hasn't approved enough...

...Some owners might be able to rebuild, but can't risk putting more money into property that will hold its value only if the rest of the neighborhood comes back...

...Worse neighbor. ' hoods resemble not a jack-o'-lantern but a ghost town-which of course is even more frightening...

...How, pray tell, can HUD bureaucrats issue a waiver from requirements under the jurisdiction of a totally different department...

...As of five months after the storm, some two-thirds of the city's residences still were without power...

...He loudly trumpeted the idea that these grants were to help property owners rebuild neighborhoods...

...Instead, the most important and most misplaced assignment of culpability comes from the Bush administration and far too many Beltway conservatives who seem to blame Louisiana Katrina victims for building in a flood plain...

...The first thing to understand is that the large majority of Louisianans with destroyed property were victims as much of the federal government as of Mother Nature...

...Just before Christmas, the key House committee passed the Baker bill by a bipartisan, 50-9 vote, and the bill enjoyed bipartisan, indeed universal, support from Louisiana's otherwise fractious conglomeration of elected officials...

...Robert Bea, a geotechnical engineer at the University of California at Berkeley and a key consultant for the National Science Foundation's post-Katrina study team, told the Picayune this about the Corps: "In my view, in the case of the 17th Street, London Avenue and even the Industrial Canal floodwalls, fundamentally what we are looking at is a failure focused on the institutional side...

...It was Baker, again, who found the joker in the deck...

...Right now even the most active of redeveloping neighborhoods are subject to what locals are calling the "jack-o'-lantern effect...

...It was the federal Army Corps of Engineers that built the floodwalls and was ultimately responsible for maintaining them--and the Corps said the walls would hold...

...The Baker bill acknowledges that much of the property in southern Louisiana isn't now worth nearly what it was six months ago, so it provides for the LRC to buy the properties at a discount...

...And, as noted earlier, the vast bulk of that would be eventually repaid to the Treasury...

...The problem with this blame game is that the residents had been assured that they lived in one of the safest flood plains in the country, because the top civil engineering minds in the country had repeatedly said their levee-and-floodwall system could withstand any storm that hit southeast Louisiana with the force Katrina mustered...

...Under Baker's plan, homeowners would not wonder whether they would be the only ones to rebuild in their neighborhoods, because the LRC would make refurbished properties available in big chunks...

...But its positive impact would be immediate, as banks probably would stop foreclosures as soon as the Baker bill passed, in anticipation of the coming aid...

...The market cannot work," Baker told me, "without some entity to aggregate titles to properties and clean them up...

...Then there's this: Community Development Block Grants have sometimes been notorious for abuse...

...Not exactly...

...Second, and most amazingly, while CDBG grants are a HUD program, the Stafford Act involves FEMA...

...in some bureaucratic pipeline...

...Furthermore, taxpayers would know that the LRC would avoid the problem of funneling money through the supposedly corrupt and incompetent Louisiana state government...

...Fourth and most importantly (not to mention most idiotically), the legislative language requested by the Bush administration would actually preclude the money's use for rebuilding and repairs-and "in perpetuity" to boot...

...AKE POINT ONE: Few principles a r e more ili important to conservatives than the one that insists on assigning responsibility where it's due...

...There can be no doubt that part of New Orleans, maybe 10 or 15 percent of it, should revert to wetlands or other green space...

...Another huge portion of the money was wasted on overpriced debris-removal contracts-and to companies from out of the region, so the money didn't even benefit the affected states...

...Nearly everyt~aly believes that whatever money has been spent has not been spent wisely...

...We've spent $85 billion already," they say, "and asked for $19 billion more...

...i'~ ND THOSE ARE THE GOOD PORTIONS of the flooded sections of New Orleans...

...But he who guarantees against l o s s - i n this case, the federal government through the Corps-should be held culpable when the losses occur after all...

...Baker was a self-made success in real estate at an early age before entering politics, and he long has been valued by conservatives for his expertise on banking and investment issues...

...And the one creative free-market approach to rebuilding a storied city and region, the Baker bill which is designed to recoup money for taxpayers at the back end of the process rather than waste it through the ordinary free-spending bureaucracies, is the one that the Bush administration--for To be clear, conservatives everywhere should want to rebuild New Orleans, or at least the 85-90 percent of it that modern engineering makes feasible and safe...

...The money earned from those sales would return to the Treasury, to be borrowed again for the next round of properties...

...Treasury, buy Louisiana properties, bring them up to new environmental and zoning requirements, and resell them to developers...

...It's akin to the lines of credit many businesses use routinely...

...APRIL 2006 THE AMERICAN SPECTATOR 39...

...About $17 billion was paid for flood insurance claims financed less by taxpayers than APRIL 2006 THE AMERICAN SPECTATOR 35 THE BATTLE OF NEW ORLEANS from pre-paid premiums from homeowners...

...Third, the money won't be recycled: Not a penny would return to the Treasury upon resale...

...As Baker told me, "Even if you are a homeowner who has money in your pocket and you could elect to rebuild, why would you do it unless you know your neighborhood will be rebuilt: If no one else comes back, you have not restored value because of the desolation of the remainder of the area...

...The Government Accountability Office determined that FEMA paid out millions and millions of dollars for some 900,000 fraudulent claims...

...For if conservatives are not for preserving what is best of our culture, what are we for...

...Such criticism is of course true, but it is for these purposes only of minor relevance...

...But the President specifically said this new $4.2 billion was for rebuilding, not for eco-management...

...About $900 million was wasted by FEMA on manufactured homes that are unusable because they don't meet FEMA's own guidelines for use in flood zones...

...Indeed, at the very same time that the Bush administration is touting CDBG as the solution for New Orleans, its own budget request for 2007 proposes ending CDBG altogether by folding it into another program...

...The problems with this approach were manifold...

...The Crescent City's historic architecture, its status as the birthplace of jazz, its historic importance as the means of opening the West and as the site of the greatest victory of the War of 1812, all argue that this world-renowned metropolis should rise again, better than before but with the best of its character intact, as a monument to the efficacy of conservative solutions applied to special and important circumstances...

...But the chief engineer of the Corps' New Orleans office dismissed Vicksburg's concerns as a mere "engineering judgment" with which he disagreed...

...Not very conservative, that...

...T IS HERE THAT THE BUSH RECORD, especially when 31 compared to the opportunities available, is so ~i!, poor as to go beyond incompetence to sheer negligence...

...0 BE CLEAR, CONSERVATIVES EVERYWHERE ,~ should want to rebuild New Orleans, or at least the 85-90 percent of it that modern engineering makes feasible and safe...

...Go figure...

...For his legislation to actually forbid the use that he advertised is a mark either of dishonesty or extreme incompetence...

...As it will do, according to the local planning committees working on the subject...

...To understand the tragedy inherent in Bush's opposition to the most promising conservative approach to disaster relief, offered by conservative U.S...

...State officials say that Hurricanes Katrina and Rita destroyed at least 128,000 homes in Louisiana, while at least 75,000 other homes sustained severe damage...

...A few days later, the Times-Picayune confirmed that report: Some of the money was for loans that must be repaid...

...Jt~ + -~~ ~JUleglngence,:-Incompetence, . ~+dr~d[fference, George W. Bush :l~'pr~i~g to be no Andrew Jackson...

...To keep the LRC from being a permanent bureaucracy, its mandate would expire in ten years (or less...

...Instead, the properties "will be dedicated and maintained in perpetuity for a use that is compatible with open space, recreational, or wetlands management practices...

...All of which is why the whole, bungled Bush response to Katrina has amounted to throwing good money after bad...

...That's why it has been so baffling to see the current Bush White House treat him, with attacking press conferences and op-ed pieces, as if he were a hated member of the SchumerPelosi brigades...

...Property owners can't move forward until the banks help them out...

...Quin Hillyer is executive editor of The American Spectator...

...Finally, if conservatives value commerce and agriculture, New Orleans must continue to thrive...

...BY QUIN_HILLYE4~, , " ~ | OME CONSERVATIVI~ TIIINK that President George W. Bush approved tom much federal money in response to Hurricane Katfina...

...When the discrepancywas pointed out, administration officials rushed to say that it would be okay in the end because state agencies could just request a waiver from HUD from the normal Stafford Act requirements...

...First, a word about Richard Baker: He's a conservative stalwart and a long-standing supporter of all things Bush...

...Memo to Bushie: You're doing a heckuva job...

...The second thing to understand is that very little federal money has actually reached Katrina's victims themselves, and even less of that federal spending has gone for reconstruction as opposed to stop-gap relief...

...Otherwise, as described in the Times-Picayune, the nearby "idle, blighted and unoccupied buildings will pose a fire hazard or become breeding grounds for mosquitoes and rodents...

...But, for just one example of the Corps' engineering errors, the New Orleans Times-Picayune reported that the Vicksburg, Mississippi office of the Corps back in 1990 warned that the designs for New Orleans' 17th Street Canal floodwall were deficient-that they were only half as thick and about as third as deep as they should have been to remain rooted in the soft, boggy soil of the area...

...And much of the nation's seafood is spawned in Louisiana's marshes and harvested from its waters...

...Baker's bill comes in, and where conservatives more than anybody have reason to be furious with this bullheaded administration...

...Second, the grants would be funneled through the same Louisiana government that taxpayers in the rest of the country distrust (whereas the Baker plan would set up a quasi-independent, public-private corporation far less hamstrung by the iner38 THE AMERICAN SPECTATOR APRIL 2006 QUIN HILLYER tia of government bureaucracies...

...Unfortunately, Vicksburg was right, and it was those design flaws that helped lead to the floodwall's collapse...

...But his own administration's lack of imagination is condemning New Orleans to ruin...

...In sum, the President was correct when he said in Jackson Square on September 15 that "There is no way to imagine America without New Orleans...

...FEMA itself admitted that of its first $29.7 billion for 2005 hurricane relief, $7.6 billion-more than a fourth of it-was used for "administration...

...That's not to be sneezed at, but when about three-quarters of one of the world's most famous cities plus maybe 90 percent of abodes in two neighboring parishes have been made unlivable, the need for rebuilding assistance is unprecedented...

...The semi-private LRC, overseen by a board appointed by President Bush, would borrow money from the U.S...

...Enter Baker with a very Jack Kemp-like idea: Help New Orleans and its surroundings by promoting home ownership and private development, specifically in areas deemed safe and sustainable, while "re-creating the market" with a short-term infusion of government cash that itself is reimbursable to the taxpayers...

...The taxpayers would get the bulk of their investment back--rather than just making direct grants never to be repaid-while the property owners, and the financial institutions that hold their mortgages, avoid foreclosures and crushing debts...