[StBernard] The Battle of New Orleans

[Westley Annis]

The Battle of New Orleans 
By Quin Hillyer  
Published 3/10/2006 12:06:03 AM 

 
 This article will appear in the April issue of The American Spectator,
which also includes articles on the Bush administration by R. Emmett
Tyrrell, Jr., Alfred S. Regnery, Angelo M. Codevilla, Robert D. Novak,
Stephen Moore, and John H. Fund. Click here to subscribe.


SOME CONSERVATIVES THINK that President George W. Bush approved too much
federal money in response to Hurricane Katrina. Many liberals think he
hasn't approved enough. Nearly everybody believes that whatever money has
been spent has not been spent wisely.


They're all correct.

What's most distressing about the Bush response, and non-response, to
Katrina is that all the President's promises for a creative new approach to
major-disaster relief have gone for naught. 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. 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.

To understand the tragedy inherent in Bush's opposition to the most
promising conservative approach to disaster relief, offered by conservative
U.S. Rep. Richard Baker of Louisiana, a little background is in order. 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. 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. The third essential point is that both private and public
reconstruction efforts have been delayed by federal red tape. And the fourth
crucial fact is that New Orleanians cannot rebuild their own city if they
have nowhere to live while doing it -- and 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.


TAKE POINT ONE: Few principles are more important to conservatives than the
one that insists on assigning responsibility where it's due. The claim that
the feds, 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. Such criticism is of course true, but it is for
these purposes only of minor relevance. 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. (Never mind that the White House
itself is in a flood plain without anybody thinking that West Wing employees
need flood insurance.) 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. 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.

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. But the chief engineer of the Corps' New Orleans office
dismissed Vicksburg's concerns as a mere "engineering judgment" with which
he disagreed. Unfortunately, Vicksburg was right, and it was those design
flaws that helped lead to the floodwall's collapse.

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."

In many cases, New Orleans' Katrina victims had no flood insurance
specifically because they were advised that they needed none. But he who
guarantees against loss -- in this case, the federal government through the
Corps -- should be held culpable when the losses occur after all.

It is at this point that many conservatives' eyes start to roll. "We've
spent $85 billion already," they say, "and asked for $19 billion more. Even
if the feds are at fault, the taxpayers have more than done their duty."

Not exactly.

"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. A few days
later, the Times-Picayune confirmed that report: Some of the money was for
loans that must be repaid. About $17 billion was paid for flood insurance
claims financed less by taxpayers than from pre-paid premiums from
homeowners. 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. The Government Accountability Office determined that FEMA paid out
millions and millions of dollars for some 900,000 fraudulent claims.

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. Other money just replenished FEMA's
coffers for the future, and still other funds are stuck, apparently
semi-permanently, in some bureaucratic pipeline. 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."

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


IT IS HERE THAT THE BUSH RECORD, when compared to the opportunities
available, is so poor as to go beyond incompetence to sheer negligence. This
is where Rep. Baker's bill comes in, and where conservatives more than
anybody have reason to be furious with this bullheaded administration. 

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

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

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 market cannot work," Baker told me, "without some entity to aggregate
titles to properties and clean them up." 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
semi-private LRC, overseen by a board appointed by President Bush, would
borrow money from the U.S. Treasury, buy Louisiana properties, bring them up
to new environmental and zoning requirements, and resell them to developers.
The money earned from those sales would return to the Treasury, to be
borrowed again for the next round of properties. It's akin to the lines of
credit many businesses use routinely. 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.

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. 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. In
short, nobody would be exactly "made whole," but at least most people and
banks would avoid bankruptcies and collapse. 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.

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. 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. 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.

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."
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."


AND THOSE ARE THE GOOD PORTIONS of the flooded sections of New Orleans.
Worse neighborhoods resemble not a jack-o'-lantern but a ghost town -- which
of course is even more frightening. Property owners can't move forward until
the banks help them out; the banks can't move until their cash flows are
restored and until government regulations say more loans are safe; 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.

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. To protect taxpayers, the
Baker bill would impose a $30 billion limit for the LRC's borrowing. And, as
noted earlier, the vast bulk of that would be eventually repaid to the
Treasury. 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. Furthermore, taxpayers would know that the LRC would avoid
the problem of funneling money through the supposedly corrupt and
incompetent Louisiana state government. The quasi-independent corporation
would be free of most governmental bureaucracy, but it would answer to
federal standards. To keep the LRC from being a permanent bureaucracy, its
mandate would expire in ten years (or less). 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. 

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. But the Bush administration, inexplicably, opposes the plan, and
vociferously so. The administration's explanations have been shifting,
misleading, and confused. 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. But when in mid-February 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. He loudly
trumpeted the idea that these grants were to help property owners rebuild
neighborhoods.

The problems with this approach were manifold. First, the block grants can't
be doled out until HUD finishes its regulations. 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
inertia of government bureaucracies). Third, the money won't be recycled:
Not a penny would return to the Treasury upon resale. 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.

It was Baker, again, who found the joker in the deck. 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. Instead, the properties "will be
dedicated and maintained in perpetuity for a use that is compatible with
open space, recreational, or wetlands management practices."

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. As it will do, according
to the local planning committees working on the subject. But the President
specifically said this new $4.2 billion was for rebuilding, not for
eco-management. For his legislation to actually forbid the use that he
advertised is a mark either of dishonesty or extreme incompetence.

When the discrepancy was 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. Two problems:
First, the waiver process is slow, unpredictable, and full of red tape. (Not
very conservative, that.) Second, and most amazingly, while CDBG grants are
a HUD program, the Stafford Act involves FEMA. How, pray tell, can HUD
bureaucrats issue a waiver from requirements under the jurisdiction of a
totally different department?

Then there's this: Community Development Block Grants have sometimes been
notorious for abuse. 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. In short, what's supposedly good for New Orleans is the
same program otherwise too problematic for the rest of America. Go figure.

All of which is why the whole, bungled Bush response to Katrina has amounted
to throwing good money after bad. Way too much money has been appropriated
overall, but far too little has been put to good use. 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 reasons murky
and perhaps uncharitable or even Machiavellian -- has opposed with all its
might. 

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


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

Finally, if conservatives value commerce and agriculture, New Orleans must
continue to thrive. 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. Cement, steel, and rubber, meanwhile, all
flow upriver to the industrial Midwest. And much of the nation's seafood is
spawned in Louisiana's marshes and harvested from its waters.

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


Quin Hillyer is executive editor of The American Spectator. This article
will appear in the April issue of The American Spectator, which also
includes articles on the Bush administration by R. Emmett Tyrrell, Jr.,
Alfred S. Regnery, Angelo M. Codevilla, Robert D. Novak, Stephen Moore, and
John H. Fund. Click here to subscribe.