The President visited New Orleans again this week, his first trip since standing in Jackson Square promising to rebuild. This week, he highlighted tax credit legislation to encourage the private sector to rebuild, and modest levee funding. While this will help a little, it continues to ignore the magnitude of the disaster. The solutions put forward are larger versions of typical economic development strategies. They rely on small amounts of public dollars to leverage large private sector investment and additional tax credits to sustain growth. This strategy can work in areas suffering from economic disasters like the shuttering of a large employer. But the complexity of the challenges facing New Orleans faces challenges demand innovative ideas, not retreads of existing strategies.
Plans to reconstruct the city acknowledge that some areas of the city will be lost, and many residents will not return. At this point, that is likely true. But why?
After the water receded and the magnitude of the damage to New Orleans became clear to officials, estimates of the recovery cost approached $200 billion. Despite this, Congress has appropriated $85 billion. Perhaps more will be made available, but the failure of the President to lead Congress to rapidly commit large sums of money both for levee repair and reconstruction has undermined the confidence of New Orleans' former residents. This has exacerbated problems from Katrina, created new ones, and undermined the effectiveness of the solutions put forward by the President.
Last weekend I went out with some friends in the Garden District. Many businesses there have reopened. But shuttered businesses remain closed because they lack for workers. Workers can't return because they have nowhere to live, and the city can't provide essential services like schools. With its tax base destroyed, New Orleans needed a major commitment of federal funds to reopen its schools and rebuilt critical infrastructure. Instead, it's received loans and vaguely worded promises about rebuilding. So the city has been slow to rebuild. And every day more families decide never to return.
The President's tax cuts only work if the businesses return. It is an embarrassment if this administration believes the most effective way to reconstruct New Orleans' economy is by lowering marginal tax rates for businesses. Sure, that can be part of the solution, but realistically, the New Orleans needs a massive influx of federal cash to restore city services and a major housing construction initiative.
While it's not too late to improve upon the current state, I've seen nothing to indicate a comprehensive effort from the federal government. Instead the reconstruction effort will proceed at the minimum politically acceptable level. And with most Americans unaware and focusing on the next made up controversy, like whether an Oprah-endorsed book was true, the Crescent City will not rise again.