$127 Billion in the Big Easy, and The Private Sector Out Performs

Larry Kudlow follows the Hurricane Katrina relief money in his latest blog posting and column for National Review Online. The federal government has thus far spent $127 billion to help rebuild Louisiana. That's more than the Marshall Plan (adjusted for inflation) and nearly the GDP of the entire state. Split evenly among New Orleans residents, they would each have $425,000 in the bank. You get the idea.

Despite the funding, Louisiana remains marred by high crime and lack of housing. As to where some of the money went,

Well, the White House fact sheet says $24 billion has been used to build houses and schools, repair damaged infrastructure, and provide victims with a place to live. But isn’t everyone complaining about the lack of housing?...

The fact sheet goes on to say that $7.1 billion went to the U.S. Army Corps of Engineers to rebuild the levees; that the U.S. Department of Education spent $2 billion on local schools; and that the Laura Bush Foundation for America’s Libraries has awarded more than $2.5 million (the pikers). The administration also provided $16.7 billion as part of the largest housing-recovery program in U.S. history.

So the billion-dollar question becomes: Where did the rest of that money go?

Right from the start, New Orleans should have been turned into a tax-free enterprise zone. No income taxes, no corporate taxes, no capital-gains taxes. The only tax would have been a sales tax paid on direct transactions. A tax-free New Orleans would have attracted tens of billions of dollars in business and real-estate investment. This in turn would have helped rebuild the cities, schools, and hospitals. Private-sector entrepreneurs would have succeeded where big-government bureaucrats and regulators have so abysmally failed.

This is the real New Orleans Katrina story. It’s a pity that the mainstream media isn’t writing about it. Call it one of the greatest stories never told

Meanwhile, yesterday's USA Today points out the accomplishments of the private sector versus government systems in rebuilding the Big Easy.