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THE NEW DEAL

On Their Own in Battered New Orleans

What Bush said would be one of the largest public reconstruction efforts ever is becoming a private affair, leaving the tough choices to residents as their risks increase.

December 04, 2005|Peter G. Gosselin | Times Staff Writer

New Orleans — Laurie Vignaud faces a double dilemma: If she rebuilds her wrecked ranch house at 1249 Granada Drive in the great suburban expanse south of Lake Pontchartrain, will her neighbors do the same? And even if they do, will that guarantee their Gentilly neighborhood does not end up an isolated pocket in a diminished, post-Katrina New Orleans?

Nothing in Vignaud's 46 years, not even her job as affordable housing vice president with Hibernia Bank, the region's biggest financial institution, prepared her for this problem. From her relocated offices in Houston, she recently confessed, "It's scary."

"I don't know when I'll ever go home."

Double dilemmas abound in this deeply damaged city, and represent considerably more than the start of the slog back from disaster.

Lost amid continued talk of billions in federal aid is the fact that most homeowners and businesses are being left to make the toughest calls on their own. Lost is that New Orleans' recovery -- which President Bush once suggested would be one of the largest public reconstruction efforts the world had ever seen -- is quickly becoming a private market affair.

"My constituents have pretty much concluded that it's up to us to put our neighborhood back together and get on with our lives," said Republican city council member Jay Batt, who represents the Lakeview neighborhood just west of Vignaud's.

To market advocates, this is the way it should be. Rugged individuals settled the American West in the 19th century and can resettle the Crescent City in the 21st.

But the risks that individual New Orleanians must shoulder in such an on-your-own recovery appear staggeringly large.

"There is no market solution to New Orleans," said Thomas C. Schelling of the University of Maryland, who won this year's Nobel Memorial Prize in Economic Sciences for his analysis of the complicated bargaining behavior that underpins everything from simple sales to nuclear confrontations.

"It essentially is a problem of coordinating expectations," Schelling said of the task that Vignaud and her neighbors must grapple with. "If we all expect each other to come back, we will. If we don't, we won't.

"But achieving this coordination in the circumstances of New Orleans,'' he said, "seems impossible."

The situation in which residents find themselves is an extreme example of a trend underway for a quarter-century, a shift of economic risk from business and government to working families, and an increasing reliance on free markets to manage society's problems.

Safety nets such as unemployment compensation, employer-provided healthcare insurance and pensions, and, recently, effective disaster relief have been reeled in or removed. Increasingly, families from the working poor to the affluent are left largely to buy and sell their own way to safety even when their individual efforts seem utterly outgunned, as they do in the case of Katrina.

"There are classes of problems that free markets simply do not deal with well," Schelling said. "If ever there was an example, the rebuilding of New Orleans is it."

Promises, then reality

Prospects for a quick municipal comeback peaked 17 days after the hurricane and flood, when Bush stood before St. Louis Cathedral in historic Jackson Square and told a national television audience that "there is no way to imagine America without New Orleans, and this great city will rise again."

The hopes thus raised were kept alive in the first two months following Katrina. The president sought first one, then two emergency spending bills totaling $62 billion. The Army Corps of Engineers quickly signed contracts to rebuild the city's protective levees to their pre-storm condition. The Federal Emergency Management Agency announced it would award 60,000 households the maximum allowable relief of $26,200. A steady stream of planning conferences by architects, urbanists and political leaders spread the good word that major metropolises never die.

But in recent weeks, a new reality has settled in as the agencies that were stepping up to help guide the city's comeback have stepped back down again.

FEMA said it would stop covering the hotel costs of more than 50,000 households at the beginning of December -- later extended until Jan. 7 -- even while acknowledging that many, especially in New Orleans, would have trouble finding alternative accommodations.

Despite repeated pleas, the corps and the White House refused to promise any strengthening of the levees beyond what was underway. Investigators, meanwhile, concluded that several of the protective walls that failed did not meet corps-approved standards, a discovery that raised doubts about the safety of the entire levee system.

Emergency spending slowed sharply. The national flood insurance program temporarily suspended claims payments for Katrina, and program officials hinted broadly that they would tighten eligibility requirements to get coverage for the next storm.

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