A few days after Katrina struck New Orleans last September, President George W. Bush told the press that the relationship between the federal, state and local governments is “an important relationship, and I need to understand how it works better.”

New Orleans Mayor Ray Nagin, desperate and frustrated, was a bit more straightforward in his assessment of how federalism works in practice: “I don’t know whether it’s the governor’s problem,” he said. “I don’t know whether it’s the president’s problem. But somebody needs to get their ass on a plane and sit down, the two of them, and figure this out.”

Long before Katrina hit the city, New Orleans’ residents already knew that the Bush administration had abandoned them. The federal response to the disaster simply put his indifference to the plight of cities and poor people in dramatic relief.

Indeed, Katrina was not an equal opportunity disaster. The poorest and predominantly black neighborhoods were hit hardest by the hurricane. The Bush administration apparently assumed that people would evacuate New Orleans on their own, without giving much thought to who these people were, what resources they had, or where they would go. They acted as if everyone had an SUV full of gas and family or friends (or a second home) waiting to take them in somewhere safe.

At every stage – from the failure to upgrade the levee system, to the failure to provide emergency services to Katrina’s victims, to the failure to target adequate resources to help survivors rebuild their lives and their communities – the Bush administration demonstrated that it was more conservative than compassionate.

Racial and Economic Fault Lines

Culturally, New Orleans is a unique city, but its social conditions parallel those in most U.S. cities, with stark economic and racial disparities. New Orleans (with a 23.2 percent poverty rate) is one of the nation’s poorest cities. The city’s median household income in 2000 was only $27,133. Only 46.5 percent of its households own their own homes – one of the lowest big-city homeownership rates in the South. Of the city’s African Americans, 35 percent do not own a car, compared with 15 percent of whites. Louisiana’s fiscal capacity ranked 48th in the country and its social safety net is among the weakest for the poor, elderly, children and people with disabilities.

Since the 1960s, while most southern cities gained population, New Orleans declined like a rustbelt city. Having reached its peak population of 627,525 in 1960, it had declined to 462,269 in 2004.

From 1980 through 2003, New Orleans lost more than 50,000 jobs. The city’s port lost business to Miami and Houston. Several major companies with headquarters in the city left town. By 2000, only one Fortune 500 firm – the city’s power company – remained. Tourism, a low-wage industry whose major employers are headquartered elsewhere, increased its importance as a source of jobs. The New Orleans area saw a faster exodus of jobs, as well as middle-class and wealthy families, to the suburbs than in other metropolitan areas, exacerbating the city’s fiscal crisis.

New Orleans is also among the most ghettoized. Among the nation’s 100 largest metro areas, it ranks third in poverty concentration. In 2000, 23 percent of the poor in metro New Orleans lived in high-poverty neighborhoods (where at least 40 percent of the population live below the poverty line).

Housing discrimination and the concentration of government-subsidized housing have contributed to the city’s economic and racial segregation. Over two-thirds of New Orleans residents, but only one-fifth of suburban residents, are African-American. New Orleans ranked among the nation’s most racially segregated urban areas. The metro area’s dissimilarity index in 2000 was 69 – meaning that 69 percent of blacks would have to move to achieve an equal distribution of blacks and whites in every neighborhood.

Incompetence or Indifference?

Conservative pundits and politicians have characterized Bush’s mishandling of the disaster as the inherent inefficiency of “big government.” But government – whether big or small – can be competent. In fact, the federal government has a reasonably good track record of responding to earthquakes, floods and hurricanes. President Lyndon Johnson quickly and competently responded to Hurricane Betsy, which struck New Orleans in September 1965. More recently, the Clinton administration significantly professionalized and improved the Federal Emergency Management Agency (FEMA), appointed an experienced administrator (James Lee Witt), increased its budget and developed close working relationships with governors, mayors and their disaster management agencies. Its success in overseeing relief and reconstruction after the 1994 Los Angeles earthquake suggests that the federal government can act effectively and efficiently in times of crisis.

The Bush administration’s actions might better be characterized as indifferent rather than incompetent. It was a natural outgrowth of its fundamental hostility to government itself. A central tenet of conservative ideology is the belief in small government, highlighted by its insistence that government interferes with individual liberty, is less efficient than the private sector and, in many cases, is simply unnecessary.

Conservatives like President George W. Bush, his Republican allies in Congress, his intellectual strategists like Grover Norquist of Americans for Tax Reform and William Kristol of the Weekly Standard and the corporate-sponsored policy wonks at the American Enterprise Institute, Cato Institute and the Heritage Foundation argue that (with the exception of military spending) we need to further reduce government, in large part, by cutting taxes even more, especially for the very rich. They call this “starving the beast”– reducing taxes so much that government in general, and the federal government in particular, will be virtually paralyzed.

With the Katrina disaster, these conservatives got what they were looking for. When it was needed most, government was paralyzed. Americans watched in shock as the consequences played themselves out on television.

We do not yet know the magnitude of the Bush administration’s blunders and misjudgments, or their cost in human lives and property damage. What is clear is that its indifference toward New Orleans began long before Katrina struck. The Bush administration systemically stripped FEMA and the Army Corps of Engineers of authority, money and key staff; undermined their morale; and ignored warnings by state emergency managers that its actions were sabotaging FEMA’s capacity to respond to disasters. It folded FEMA into the Department of Homeland Security, diminishing its role as an emergency planning and relief agency while viewing it as simply another part of the administration’s “war on terror.” It failed to invest adequately in the infrastructure needed to prevent severe hurricane damage in New Orleans and Mississippi. The Bush administration knew long before the storm hit that 100,000 New Orleans residents had no way to escape a major hurricane on their own and that the city had finished only 10 percent of its evacuation plan. The National Weather Service correctly predicted the force of the storm, but the top officials in the Bush administration failed to heed the message.

Two weeks after Katrina hit, Bush made big promises about rebuilding the Gulf Coast region. But six months later, there was no major federal reconstruction on the drawing boards, much less underway.

Businesses won’t return without flood protection and basic infrastructure, but the Bush administration has no plan or timetable for these basics. As The New York Times columnist Paul Krugman observed, “Businesses are reluctant to return to the region because they fear their customers and workers won’t return. And families are reluctant to return because they aren’t sure whether businesses will be there to provide jobs and basic amenities.”

Even in terms of emergency relief, the Bush administration was extremely slow to marshall the necessary resources. According to The New York Times, “FEMA had planned to have 360,000 ready-to-eat meals delivered to the city and 15 trucks of water in advance of the storm. But only 40,000 meals and five trucks of water had arrived.”

Two months after Katrina struck, at least 20,000 public school students from Louisiana (mostly from New Orleans) who were uprooted by the hurricane, were still not attending any school. About 200,000 evacuees remained in hotels, while only 7,308 temporary trailers and 10,940 housing units had been occupied by victims in the three affected states. Many Medicaid recipients were unable to get benefits in their new locations.

Six months after the storm, FEMA had provided only 3,000 of the 21,000 trailers requested by New Orleans residents to use as temporary shelter while they rebuild. In contrast, in Mississippi, whose Republican governor has close ties to the White House, 34,560 of the 40,000 requests had been met. FEMA had also cut off temporary housing assistance to evacuees living in apartments and hotels around the country before they were able to find stable housing. As a result, many Katrina victims were evicted with no place to go.

Crony Capitalism and Disaster Profiteers

Bush has been justly faulted for his failure of leadership and his mishandling of the nuts and bolts of the Katrina relief effort. But on several matters involving post hurricane reconstruction, Bush was exceedingly decisive. Bush used the Katrina disaster as a pretext for the administration’s crony capitalism, corporate agenda and disregard for the urban poor.

Post-Katrina, the Bush administration sought to enact conservative policies that it could not get through Congress under normal circumstances. It dusted off several free-market approaches – such as a “Gulf Opportunity Zone” (tax breaks for small businesses) – that have failed in the past. It lifted affirmative action requirements for contractors. It proposed allowing the Environmental Protection Agency (EPA) to waive environmental regulations, including provisions of the Clean Air Act, during the rebuilding. It promoted the use of school vouchers for children of Katrina evacuees. It rescinded rules governing the number of hours truckers can work.

Many Republicans in Congress demanded that any supplemental funds to provide relief to Katrina’s victims – now likely to cost more than $100 billion – be offset with budget cuts rather than tax increases. Only a few weeks after Katrina hit, Congressional Republicans called for over $50 billion in spending cuts, most from programs for the poor, such as Medicaid, food stamps, child care support, the earned-income tax credit and Supplemental Security Income.

Even Jack Kemp, the conservative HUD secretary under the first President Bush, criticized Bush’s approach: “There has to be some federal leadership here,” Kemp says. “Laissez-faire, Darwinian capitalism is not going to work. Markets do work, but they need the direction of government in situations like this.”

For some companies, especially those with political connections, Katrina – like the war in Iraq – is a bonanza. The reconstruction of New Orleans and the Gulf Coast unleashed a feeding frenzy of government contracts. FEMA and the Army Corps of Engineers quickly suspended rules in order to allow no-bid contracts and speed up reconstruction.

As The New York Times reported, “From global engineering and construction firms like the Fluor Corporation and Halliburton, to local trash removal and road-building concerns, the private sector is poised to reap a windfall of business in the largest domestic rebuilding effort ever undertaken.”

According to the Los Angeles Times, lobbyists representing energy, transportation and other corporate sectors dominated the task forces created by Louisiana Senators David Vitter (a Republican) and Mary Landrieu (a Democrat) to advise them in drafting the Louisiana Katrina Reconstruction Act. The legislation included “billions of dollars’ worth of business for clients of those lobbyists.”

Compounding this crony capitalism, Bush suspended the Davis-Bacon law for Katrina-damaged areas of Alabama, Florida, Louisiana and Mississippi. Enacted in 1931, it sets a minimum pay scale for workers on federal contracts by requiring contractors to pay each region’s prevailing wages. The prevailing wage for a carpenter is about $12 an hour in New Orleans and $7 an hour in Gulfport, Mississippi, both far below the national average.

The Bush administration, Congressional Republicans and their corporate allies have long opposed the Davis-Bacon law. During the 2004 election cycle, the construction industry donated $71 million to candidates for the White House and Congress. Seventy-two percent of those contributions went to Republicans, according to the Center for Responsive Politics, a nonpartisan watchdog group. They used Katrina to impose their agenda through the back door.

(In late October, after enormous public criticism of these actions, Bush reversed both his no-bid and Davis-Bacon decisions.)

Who Will Rule the New New Orleans?

In the wake of Katrina, class and race struggles have risen to the surface. The battles are over which local stakeholders will play important roles in how federal funds are allocated for rebuilding the city, who will receive the funds and how those funds will be used.

In deciding New Orleans’ fate, the Bush administration and Republicans in Congress hold most of the cards. In shaping its plans for reconstructing the areas devastated by Katrina, Bush has sought to circumvent Louisiana Governor Kathleen Blanco and New Orleans Mayor Ray Nagin (both Democrats), while working closely with Mississippi Governor Haley Barbour (former head of the Republican National Committee).

Occasionally, class conflicts surface in the political arena. For example, in 2002, New Orleans ACORN and the Service Employees International Union (SEIU) waged a grassroots campaign to get the city to adopt a municipal minimum wage that was $1 over the federal level. The referendum passed with support from 63 percent of the voters. After the vote, however, the region’s business groups, which had led the opposition to the proposal, successfully filed suit in Louisiana Supreme Court to uphold a state law to preempt local minimum wage ordinances, overturning the people’s will.

Those same business interests now dominate the blue-ribbon task forces created by Blanco and Nagin to make recommendations for post-Katrina rebuilding. The proposals offered no clear plan for rebuilding the hardest-hit areas or helping move its residents to more affluent areas to avoid further ghettoizing the city’s poor. The more affluent areas of Algiers, the Garden District and the French Quarter were relatively unscathed and its residents returned quickly, but residents of the hardest-hit areas were left to fend for themselves.

Many of their New Orleans houses and apartments may be uninhabitable. Their neighborhoods may be toxic health hazards for some time. Their old jobs may no longer exist, at least in the short-term. A Brown University analysis predicted that New Orleans could lose as much as 80 percent of its black population, and half its white population, if its most damaged neighborhoods are not rebuilt and if there is not significant government assistance to help poor people return. Under that scenario, New Orleans would shrink into a predominantly white city of only 140,000 people.

New Orleans’ citizens – especially the poor and black residents scattered in other cities and states – have been further disenfranchised politically. Six months after the hurricane, it still wasn’t clear how the state and city would deal with displaced voters. Will they retain their right to vote as Louisiana and New Orleans residents, even if they do not return for six months or a year? Or will state and local politicians try to remove them from the voting rolls? Even if they remain on the voting lists, will the local politicians make a serious effort to find them and provide them with absentee ballots?

This is particularly important because Mayor Nagin and the entire city council are up for reelection on April 22. Nagin, who was first elected as the business-backed candidate, with most of his electoral support from white voters, has lost much of his credibility among business, and white and black voters alike. He will have to face several challengers. As The Washington Post noted: “The election will be one of the most important in the city’s history, with the winners set to play a pivotal role in deciding how the city will be rebuilt. But with only a smattering of the city’s residents back home, it will also be an election in which voters will be difficult to find and residency hard to prove, leaving candidates unsure of how to campaign.”

In February, ACORN filed a federal lawsuit seeking major changes in Louisiana’s plans for the April elections, claiming that they would violate the voting rights of thousands of primarily African-American voters displaced from the city since Hurricane Katrina. Unless the poor, displaced residents are allowed to participate in elections, public officials will focus primarily on the concerns of businesses and the affluent.

Citizens Not Victims

The major media have portrayed New Orleans-area residents as helpless victims, grateful for any handout from the Red Cross, FEMA or other charities and government agencies. They have ignored the efforts of community-organizing groups to mobilize residents and evacuees to gain a voice in the post-Katrina deliberations. The national organizing networks immediately sent their local organizers to the Superdome in New Orleans, the Astrodome in Houston and other emergency shelters. They worked with churches, unions, community groups and their own local members to find survivors and secure emergency relief, housing and jobs.

The Metropolitan Organization (TMO), an affiliate of Industrial Areas Foundation, assisted evacuees through a group called the Greater New Orleans Katrina Voices United and conducted absentee-voter drives to organize at least 10,000 New Orleans voters in Houston to participate in the New Orleans elections. ACORN organized a Katrina Survivors Association; organized a march and rally in Baton Rouge with the Louisiana AFL-CIO, the Louisiana NAACP and SEIU locals to demand a resident voice in rebuilding; and launched a Home Clean-Out Demonstration Program, designed to preserve and rebuild thousands of homes in low-income New Orleans neighborhoods while developing a comprehensive rebuilding plan. In February, ACORN brought about 500 Katrina survivors to Washington, DC, to demand funds to help rebuild their homes and communities. The House Democrats called a special hearing to hear from the group (at which Representative Barney Frank [D-Mass.] called the lack of progress in rebuilding less-affluent neighborhoods “a policy of ethnic cleansing by inaction”), and the Senate Democrats sponsored a rally with them. They met with the FEMA director and other Bush administration officials and then held a candlelight vigil at the White House.

“We want all of New Orleans rebuilt, not just parts,” says Dorothy Stukes, a leader of the Katrina Survivors Association. “And we don’t want a Chocolate City. We want a Gumbo City, a city that has a little bit of everything in it.”

What Kind of Reconstruction?

While the rescue and resettlement of Katrina’s victims was just beginning, government officials and business leaders were already formulating reconstruction plans. The federal government approved more than $100 billion for hurricane relief and repair, the largest urban (and rural) renewal program in memory.

Will these funds be used primarily to provide a financial bonanza to politically connected corporations and developers? Or will they be used to help create strong and healthy communities that will do more than restore what was there before, improving economic, social and environmental conditions for the people who live and work there?

The answers depend in large measure on whether the residents of the region have a strong voice in shaping the rebuilding process. Through their community organizations, religious congregations, labor unions and civic groups, residents should play a central role in determining how and where the money is spent.

People hope that much of the city’s cultural life – its music venues, the French Quarter, its charming neighborhoods – can be restored. But what about the rest of the city and region? The people who return will need jobs, homes and public services. The area will need to rebuild hospitals, health clinics, parks, playgrounds and schools.

Should the federal government simply subsidize the reconstruction of the city’s low-wage economy – its hotels, casinos, and other tourist and service industries? If a major hotel chain or casino is going to get millions in federal aid, should there be some quid-pro-quos – like requiring them to pay a living wage or provide other community benefits?

Should the federal government provide homebuilders and landlords with millions of dollars in federal funds to reconstruct apartment buildings without any guarantees that rents will be affordable to the families who need them?

In rebuilding New Orleans and its suburbs, should policymakers avoid isolating the poor in ghetto neighborhoods? In reconstructing the city’s infrastructure, should they link where people live, work and shop through improved public transit?

And if the federal government is going to spend billions of dollars to rebuild homes, offices, warehouses and stores, should it subsidize their rebuilding in areas that certainly will be the target of future hurricanes?

Much of the region is now a huge brownfield – a toxic hazard that could contaminate children, workers and the elderly, producing permanent damage. Toxic areas that endanger public health should be declared Superfund sites and federal funds allocated to decontaminate them before people are permitted to live and work there.

In particular, the federal government must rebuild the city’s levee system to withstand Category 5 hurricanes. Otherwise, the less affluent will be relegated to areas that flooded during Katrina. Insurance companies and lenders will be reluctant to invest in New Orleans if they think the city could flood again.

Any rebuilding effort in the region needs to take into account the erosion of the wetlands. Policies that allowed developers to build in the wetlands played a major role in exacerbating flood conditions, harming the environment and making cities and towns in Louisiana more vulnerable to hurricane devastation. The rebuilding of New Orleans needs to complement the rebuilding of the Louisiana coast, which used to act as a land buffer to slow down and weaken hurricanes as they came onshore. This is no longer the case, because much of the Louisiana coastline has sunk into the Gulf of Mexico.

The rebuilding of New Orleans and the Gulf Coast – plus the addition of new schools and other facilities in Houston, Baton Rouge and elsewhere to accommodate their local population explosions – will generate tens of thousands of jobs, particularly in the construction of homes, roads, infrastructure, schools, hospitals and businesses. Who will get those jobs and will they pay a living wage? Local residents should be given priority for jobs rebuilding their communities. Funds should be targeted to competent nonprofit organizations that have experience in job training so that people will have permanent skills.

The New York Times reported that as many as 50,000 (out of 180,000) New Orleans homes may have to be demolished. It makes no sense to rebuild the region’s residential areas just as they were before the hurricanes. In New Orleans, for example, federally subsidized housing for the poor was concentrated in a few areas, isolating the poor in economic and racial ghettoes.

Rebuilding the region one house at a time would be wasteful and inefficient. Entire neighborhoods need to be rebuilt. Experienced nonprofit and for-profit developers should be enlisted in this effort, guided by plans created by local residents. And without homeownership counseling, people could become unwitting victims of unscrupulous and predatory lenders and contractors, who prey on desperate people, do shoddy construction and charge excessive fees. This would lead to large-scale foreclosures in a few years.

Within days of Katrina, greedy speculators were buying up properties throughout the region. To limit price gouging during this emergency, the city needs temporary rent control or a freeze on real estate transactions until a rebuilding plan is in place. Soon after the hurricane hit, Governor Blanco announced an emergency ban on evictions for tenants who had fled their homes. But under pressure from the Greater New Orleans Apartment Association, Blanco lifted the ban less than a month later.

The state of Louisiana could create a nonprofit building supplies and materials cooperative to negotiate with suppliers and purchase building materials (lumber, tools, cement, bricks, even home appliances) at a discount. The cooperative would have enormous leverage over building suppliers, using the economies of scale of large-scale purchasing. It could make these discounted building supplies available to designated developers/contractors for reconstruction. Without such an entity, the competition for building materials will lead to enormous increases in costs, making residential reconstruction much more expensive. In this way, savings would focus on building supplies, not labor.

The Lessons of Katrina

In contrast to conservative ideology, the Katrina disaster reveals how much we need government to provide things that individuals and the private sector simply cannot. It is needed to build the public infrastructure necessary for a civilized society; protect people from health, environmental and disaster risks; help relieve immediate suffering; build dams, levees, bridges, roads and public transit as well as schools, parks and playgrounds; and help people and communities restore some level of normalcy and decency.

Katrina also highlights the importance of having competent government run by well-trained people. It was a failure of political will by the highest-ranking government leaders, not incompetence by middle-level managers and front-line staff in the military, FEMA and other agencies.

Under different circumstances, the Katrina disaster could have triggered a bold social experiment, where government officials, community groups, civic leaders, unions and business would work together to rebuild the New Orleans region as a more livable and sustainable area.

Disasters, accidents and scandals often expose the things we take for granted. They force us to hold a mirror up to society and see it as it really is. The public is often shocked at the human consequences of such events. They tell pollsters that government officials need to “do something” to address the problem. They often lead to a shift in public opinion. But these events are rarely, on their own, catalysts for social change or major policy shifts. The immediacy of the tragedy soon recedes and people return to business as usual. The media soon loses interest when the political drama fades and the mundane tasks of recovery take over. The root causes and the chronic human suffering get pushed aside by stories about government turf battles and bureaucratic bungling, undermining public confidence in the capacity of government to solve problems.

The Katrina disaster begs the larger questions: What responsibility, if any, does the federal government have to provide Americans with decent housing, access to health care and opportunities for work that pays a living wage? Should government help people cope with the vicissitudes of the business cycle, the inequities of the market economy and just plain old bad luck?

Katrina also underscores the human disaster resulting from the ascendancy of right-wing ideas and corporate domination of the federal government, which extols market forces, individualism and private charity over public responsibility and the common good.