To rebuild New Orleans

AFTER HURRICANE KATRINA flooded New Orleans, federal officials warned that the city could be underwater for three months or more. Instead, aided by hot sun and clear skies, the Army Corps of Engineers expects to have the streets of New Orleans pumped dry by the end of this week -- provided, of course, that Hurricane Rita doesn’t send the water right back over the city’s weakened levees.

The pumps’ progress led Mayor C. Ray Nagin to start the city’s revival too early. On Sunday, Nagin invited residents of the Algiers neighborhood to return home, then rescinded the invitation the next day as Rita bore down on the Gulf of Mexico.

As this episode illustrates, it’s time for officials on the Gulf Coast to shift from the pedal-to-the-metal urgency of the rescue efforts to the more deliberate pace of reconstruction. As important as it is to rebuild New Orleans and let evacuees return to their homes and jobs, it’s even more critical to ensure that the rebuilt version of the Big Easy does not simply mimic the one Katrina laid to waste -- a city ridden by poverty and unemployment, with the poorest residents living in the areas most vulnerable to flooding.

That kind of economic resuscitation will require both a willingness to try new approaches and an attention to history. This country has learned much in the last 40 years about how to revive a city (and, sadly, how not to). New Orleans, more than any city in the nation, can be the beneficiary of those lessons.

Government has three basic, interrelated tasks: rebuilding the city’s infrastructure, reviving its economy and resettling its population.

President Bush has pledged that Washington will cover the bulk of the cost of rebuilding New Orleans’ roads, bridges, sewers and other public works. Because these are expensive projects that will consume most of Washington’s Katrina relief budget, federal and state officials should look for ways to put private dollars to work -- for example, by joining forces with private companies to share the cost of toll roads and bridges, then splitting the revenue.

The city’s human infrastructure is badly in need of repairs too. Although the investment will take years to yield dividends, the city needs better schools to help residents climb out of poverty and make the city more attractive to employers. The private sector could play an important role here too, through efforts such as charter schools.

To revive New Orleans’ economy, Bush has proposed creating “Gulf Opportunity Zones.” Similar to the “enterprise zones” that have been declared across the country since the 1980s, these would offer about $2 billion worth of tax breaks and loan subsidies to businesses that build and equip offices in Katrina’s wake.

Although some analysts are enthusiastic about enterprise zones, they may not be the best way to encourage New Orleans’ recovery. In general, most new jobs emanate from new, small businesses, which don’t benefit much from tax breaks because they don’t have much taxable income. By contrast, the beneficiaries of enterprise zones often are established businesses that move their offices into the zone to lower their tax burden.

If the goal is to help the economy of New Orleans without siphoning jobs from other cities, policymakers need to find ways to help entrepreneurs create jobs there that residents can and want to fill. That means making it easier and more profitable for companies to create jobs for local residents, and making it easier for residents to do the work.

Education is obviously key to that effort, and so is housing. On the housing front, the administration plans to spend $5 billion to place evacuees in 300,000 mobile homes, trailers and other temporary structures. This plan has drawn flak from both sides of the political spectrum, and rightly so. The “temporary” enclaves isolate evacuees, rather than letting them resettle close to where they can find work. The better approach is to stick with vouchers that evacuees can use to rent housing in the communities of their choice.

Hundreds of thousands of homes were damaged by Katrina and subsequent flooding, and roughly half of the homeowners in New Orleans carried flood insurance. The rest, along with many of Katrina’s other victims along the Gulf Coast, are left to haggle with their insurance companies over how much of their loss was caused by Katrina’s winds, which would be covered by homeowner’s insurance. The federal government can help both groups by offering adjusters assistance in calculating losses and mediators assistance in determining their cause.

For the city’s poorest residents, the government should follow Baltimore’s example and build low-rise, mixed-income developments that are proving more resistant to crime than the projects they replaced. Planners now have a better understanding of how to design low-income housing to discourage crime. They will have an opportunity in New Orleans to use what they’ve learned from the successes and failures of numerous American urban renewal projects.

Finally, as Congress and the administration open the federal spigot to aid the Gulf Coast, the public has the right to know exactly where its money is going -- and the obligation to share the pain.

Taxpayers have put up more than $60 billion for the rescue and recovery effort so far, and may be asked to spend three times that amount on the Gulf Coast. The best protections against waste and misuse are to ensure that contractors compete for all the projects and publicly account for their spending.

At the same time, Congress should plan to pay off the massive spending on Katrina over the next few years rather than adding to the already burgeoning deficit. The burden should be spread broadly by cutting or postponing far-reaching programs; a good place to start would be the $25 billion that Congress recently authorized for lawmakers’ pet highway projects across the country.

And it almost goes without saying that new tax cuts are simply unthinkable -- at least until the federal budget has joined New Orleans in recovering from Katrina.