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U.S. Needs Systematic Disaster Aid Plan

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The water is receding from New Orleans (slowly), incompetent bureaucrats are being ejected from the scene (slowly) and the president has even taken responsibility for his administration’s lackadaisical response to Hurricane Katrina (begrudgingly).

It won’t be long before discussions start about compensating the victims.

This is an important exercise, and hardly unprecedented. Only 11 days after 9/11, Congress created a fund that ultimately paid out $7 billion to families of those killed or injured in the attacks.

Like 9/11, Hurricane Katrina is a disaster on a national scale. The stature of New Orleans as a cultural asset is the least of it: The cost of the devastation, measured in property destroyed, lives lost and people uprooted and dispossessed will dwarf the resources of local communities and state governments in the hurricane zone.

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Once a disaster exceeds a certain scale, the feds usually step in with cash, low-interest loans and other help. The assistance, however, is often ad hoc. The damage from Katrina and the certainty that the future will see more storms, quakes and calamities yet uncategorized suggest that a systematic program for delivering aid and compensation is long overdue.

“Governments should have foresight,” says Marc Moller, an attorney at the New York firm Kreindler & Kreindler who represented hundreds of families whose claims came before the 9/11 fund. “Decisions made in the aftermath shouldn’t be tied up in bureaucratic disarray. This sort of program should have been in place well before Katrina.”

As it happens, the 9/11 fund is a poor model for the future. The fund was established largely as an afterthought to a commercial bailout: Its main purpose was to dissuade 9/11 families from suing the airlines that had allowed the hijackers to breeze onto their planes. Reasoning that the national air transport system couldn’t survive years of litigation, Congress capped the airlines’ legal exposure, then arranged to grant victims a semblance of the monetary recovery they might have received in court.

The result had all the shortcomings of a program “drafted in haste, without due consideration of the consequences and with little congressional debate,” as it was described by Kenneth Feinberg, the Washington lawyer appointed to supervise the fund, in his heartfelt book about the experience, “What Is Life Worth?” It was left to Feinberg to settle questions such as how to apportion benefits among surviving spouses, adult children, grandparents, fiances and gay companions; and to rationalize the payment of millions of dollars to the families of wealthy bond traders owning substantial assets, but a fraction of that to the heirs of cooks and maintenance workers without financial cushions.

Because Feinberg was required to relate each family’s benefit to its economic loss, and therefore to the potential future earnings of the deceased, the process bred emotional discussions of whether money was the appropriate measure of the value of a human life. What about love of family? Good works? Personal morality?

The public soon came to regard the fund not as part of the airline bailout, but as a national expression of compassion for the grieving. This led to complaints from victims of the Oklahoma City bombing and other disasters that the 9/11 victims had received special treatment.

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In his book, Feinberg argues against setting the 9/11 fund as a precedent for future compensation. He cites the “special circumstances” of 9/11 and the principle that people shouldn’t be compensated for the foreseeable consequences of their own actions -- living in a flood zone, say.

But that’s too limited a view. Some people may exercise free choice in building vacation homes on exposed beachfronts, but for others free choice isn’t all it’s cracked up to be. People need to live where there’s work. The only affordable housing may be in the riskiest neighborhoods, such as those below sea level or in an earthquake zone.

Moller says that a well-designed disaster relief program would not only help rebuild infrastructure, but provide immediate assistance to individuals. It would grant enough money to buy food, clothing and housing and cover the cost of relocating, if needed. There would be low-interest loans, and guidelines to allow for additional payments in extraordinary circumstances, such as the death of a breadwinner.

Yet the New Orleans disaster suggests that we owe even more than that to its victims. The people who suffered the most were members of a permanent underclass whose very existence shames the wealthiest nation on Earth. We know that many had no way of fleeing the city before the storm; it will soon become clear that many have no prospects for betterment in the far-flung towns and cities that have taken them in. It’s a fair bet that a rebuilt New Orleans will have little room for them, either.

They’ve been consistently failed by the educational system -- New Orleans schools rank among the worst in the country. Social services have been deteriorating for 40 years, a period in which the top tax rate paid by the wealthiest Americans has fallen from 70% to 35%. President Bush’s lone educational reform, the No Child Left Behind Act, is collapsing as more states complain that stingy federal funding leaves them unable to put it into practice.

The truly appropriate compensation for the most destitute victims of Katrina would be to reestablish the War on Poverty as a national priority, perhaps in a modern form that incorporates all we’ve learned over the years about what does and doesn’t work.

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A day after the flood, I heard a resident of one of the most abject New Orleans neighborhoods describe its condition to a TV reporter. “This is Ground Below Zero,” he said. It will take more than merely money to raise that neighborhood to sea level.

Golden State appears every Monday and Thursday. You can reach Michael Hiltzik at golden.state@latimes.com and read his previous columns at latimes.com/hiltzik.

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