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The Times-Picayune


A Lesson in Recovery

November 13, 2010

By Nicole Gelinas

President Obama lost the mid-term elections because Americans are unhappy with his economic policies, including the 2009 stimulus. For a lesson in how to do recovery right, Congress and the White House should look to New Orleans.

New Orleans experienced its economic trauma three years before the rest of the nation did. That trauma came, of course, with Katrina’s floodwaters. After the levees broke in 2005, observers worried that Katrina would hasten New Orleans’ decades-long slide into despair. New Orleans -- with its levels of violence and its politics of incompetence -- seemed ill-equipped among American cities to survive such a disaster.

New Orleans, though, as its citizens know, has survived, and has the chance to thrive.

The city, having recovered 80 percent of its population, is for the first time in nearly six decades growing, not shrinking. Unemployment is two points below the national figure. Politicians who visit can see that New Orleans is an infrastructure-construction site.


After Katrina, New Orleans, thanks to its freshly invigorated citizens, was quick to push its politicians to understand that their mission was to use federal dollars not to continue the failed practices of the past but to build a new future.

New Orleanians got it before the Tea Partiers did: all the federal cash in the world wouldn’t help them if the money went to maintain a failed status quo. This realization has helped create recovery policies that achieve change -- albeit imperfectly -- rather than thwart it.

It’s easy to grasp this difference between local and national recovery by looking at two aspects of both: housing and infrastructure.

On housing, New Orleanians hate the $8.6 billion Road Home program, which awarded owners money either to rebuild damaged or destroyed properties or leave. Stories about Road Home’s inconsistencies and inefficiencies abound, and for good reason.

But Road Home has forced New Orleanians to do something without which the city couldn’t move forward: make decisions. Homeowners have had either to cut their losses or double down on their commitments.

Road Home, then, has created something that busted housing markets in Arizona, Nevada, Florida, and central California still lack: relative certainty.

The program taught New Orleans something else. For the housing market to recover, it must hit bottom. In Lakeview, residents initially cringed at the bargain-basement prices that empty lots fetched -- as low as $50,000, less than a third of their pre-storm values. But as a stable environment emerged, prices rose. Prices had to go down -- steeply -- before they could go up.

That’s how markets heal themselves. It’s a concept that the federal government hasn’t grasped elsewhere. Outside of Louisiana, aid to banks and home borrowers has helped people deny reality, rather than face up to it.

The Obama administration, for example, has helped people temporarily stay in homes they can’t afford. It has rescued lenders, too, who have used federal support to delay necessary losses and foreclosures. A genuine recovery program would follow the Road Home model, helping people realize losses and start over, even if it hurts more at first.

What about infrastructure? Unlike the rest of the nation, New Orleanians recognized from the outset that improving physical assets would give people confidence to rebuild the economy. They made sure that a healthy fraction of the federal recovery funds for Louisiana -- about 37 percent -- went toward nuts-and-bolts construction for things like floodwalls and bridges.

Contrast this figure to the 2009 stimulus. Despite Obama’s pledges to fix dams, roads, and bridges, the law offered less than 17 percent of its dollars toward this goal.

New Orleans still has much to do to keep growing. If citizens don’t hold Mayor Landrieu to his pledge to cut violence, the city won’t need all that infrastructure. Fewer people will make homes here.

But for once, New Orleans has the advantage. The city has something that it hasn’t had in decades: optimism. That’s an asset that the country, whose citizenry remains paralyzed by uncertainty and depression, could use a dose of.

Original Source:



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