February 10, 2006,
"When you go to New Orleans, to see the Mardi Gras, now don't forget your tambourine..." So sang the Neville Brothers about their hometown in its happier days. If you're headed to the Big Easy today, don't forget your box of Kleenex. The carefree Crescent City, once fueled by smiles and sunshine, has become an epic, miles-wide tearjerker.
As Joe Gyan, Jr. reported in the February 1 Baton Rouge Advocate, more than five months after Hurricane Katrina stomped the Gulf Coast, some 316,000 of New Orleans's 460,000 pre-Katrina residents remain exiled. Only about 250 of the city's 2,500 legendary musicians have returned. Just 17 of the city's 122 government schools have reopened. Flood damage and still-evacuated doctors and staffers have left one full-service hospital to treat the entire metropolis. Today, NBC News reports that 1,844 hospital beds serve the urban area, down from 4,477. Electricity is but a memory in 66 percent of local buildings.
What's cooking in New Orleans? "Nothing," celebrity chef Emeril Lagasse recently told the New York Post's Cindy Adams. "The mayor's a clunk. The governor is also a clunk. They don't know their [derrieres] from a hole in the ground. All my three restaurants got hit. I've reopened Emeril's, but only a few locals come. There're no tourists. No visitors. No spenders. No money. No future. No people. It's lost. It'll never come back."
Congressman Richard Baker believes New Orleans and its environs can come back, if they can rebuild their housing stock and thus begin rehabilitating battered communities. The Baton Rouge Republican's proposed Louisiana Recovery Corporation (LRC) appears to be the only coherent plan for revitalizing the tempest-tossed Bayou State. It deserves the proper hearing it will get before the Senate Banking Committee February 15.
Baker's bill, H.R. 4100, would issue Treasury bonds to create a $30 billion revolving-loan fund. Owners of Louisiana's 240,000 damaged or destroyed homes and small businesses voluntarily could sell their property to the LRC. It would pay owners 60 percent of their equity and lenders up to 60 percent of their mortgage receivables. The LRC would consolidate these distressed or demolished properties and auction them off to private developers. Sales revenues would repay bondholders. Original owners could ask for first dibs on revitalized properties. The LRC would expire after 10 years.
Also, Baker's $30 billion revolving-loan fund would collect and repay 60 cents on the dollar. Even if it underwrote 40 cents on the dollar, that would involve a $12 billion outlay, not the full $30 billion.
"In this case, there is basically no market. As such, people have little or no options," Baker told BayouBuzz.com. Baker, who launched a still-operating real-estate agency at age 22 and enjoys a 91 percent lifetime American Conservative Union rating, added: "The situation calls for an unprecedented solution, through a corporation that basically remakes the market, reintroduces market forces, gets property back into commerce in a necessarily more comprehensive approach, and then gradually recedes from the marketplace over time."
As public programs go, Baker's proposal is a bit like a live-virus vaccine. A limited amount of government now, followed by better health rather than illness and, eventually, even more government. Baker's plan should inoculate against the alternative: an epidemic of mortgage foreclosures, personal bankruptcies, bank failures, and an inevitable bailout by federal regulators at greater expense in outlays and litigation.
"I don't believe in taxing the good people of Kansas, New Hampshire, and California $30 billion on the grounds that otherwise you'll tax them more later," responds David Boaz of the libertarian Cato Institute. "If we actually had saved all the money that advocates of government spending had promised their programs would save, the federal budget would be negative by now."
While I usually agree that free markets should solve these things, New Orleans's markets largely have washed away. Last November, I witnessed moderate to jaw-dropping flood damage from Lake Pontchartrain clear down to Marais Street, just above the French Quarter. Only the roughly 10-block-wide "Sliver by the River," abutting the Mississippi, stood essentially intact. As John Churchill Chase observed in Frenchmen, Desire, Good Children, And Other Streets Of New Orleans his funny, fascinating 1949 history of New Orleans's street names "The present Marais Street was so-called because this street, only 10 blocks from the river, was the marais or swamp." Thus, Katrina ignored two centuries of development and literally returned the ancient swamp to its Napoleonic boundaries.
Outside New Orleans from cities like Chalmette and Slidell to parishes from Jefferson to Plaquemine to St. Bernard the devastation is at least as widespread. The destruction goes on and on and on and on.
"The bottom line is this, it is difficult to understand how Louisiana rebuilds if its landscape is littered with the remains of over 200,000 unusable homes and business properties," former Louisiana governors Mike Foster, Buddy Roemer, and David Treen, all Republicans, wrote to President Bush on February 1. Without the Baker plan, they fear these deeds will stay "tied up in a legal mess impenetrable to the private market, for years and years to come."
Despite initial interest, the White House has cooled on the Baker plan, preferring to spend another $18 billion on emergency relief, temporary housing, and other items. President Bush's efforts appear focused on, at most, 20,000 damaged homes, leaving at least 90 percent of the problem unanswered.
Some wonder, Does Washington have any obligation to southern Louisiana's flood-ravaged residents? The Army Corps of Engineers promised New Orleans and its neighbors sufficient levees and floodwalls to guard against Category 3 hurricanes. Despite earlier, higher estimates, Katrina roared in at Category 3, and the walls came tumbling down. Having failed this vital, self-assumed duty, it seems fair for Washington to bear at least some of the reconstruction burden.
Without a mechanism for reconstituting what is, essentially, a property market in smithereens, the city that nurtured jazz, oysters Rockefeller, Mardi Gras, round-the-clock cocktails and plenty more may be no more.
"I would ask all our fellow Americans if they can accept having within its shores a great American city and a substantial area of a culturally and economically important state lying in ruins for years to come," said Rep. Richard Baker. "Think about that: American ruins."
New York commentator Deroy Murdock is a syndicated columnist with the Scripps Howard News Service and a senior fellow with the Atlas Economic Research Foundation in Arlington, Va.