Last August two-thirds of New Orleans was under water. In low-lying areas - such as the lower ninth ward, where many of the city's musicians originate - almost no reconstruction work is being done. Insurance companies won't cover new buildings unless the levees are reinforced to withstand another big storm, and the government won't cough up the $30bn-plus the work is expected to cost. So the powers that be are effectively abandoning the lower-lying areas, offering precious little hope of return to the Katrina diaspora spread over the south. A city that had a population of nearly half a million has been reduced by 300,000. Some are whispering that this is a way of rebalancing the city's ethnic mix, which has been majority black for some time. ...

... Last month I watched as the second line jigged down Washington Street and came to rest outside one of the city's social housing projects, declared out of bounds by the civic authorities. The music intensified. A huge number of the projects are fenced off, even though many received only superficial damage. It's surely no coincidence that some are in areas of prime real estate. Residents were evicted at gunpoint during the storm and have not been allowed back.

On the other hand, one cannot deny the influence of sheer incompetence and lack of leadership. Quoting Bob Herbert again:

If you talk to public officials, you will hear about billions of dollars in aid being funneled through this program or that. The maze of bureaucratic initiatives is dizzying. But when you talk to the people most in need of help - the poor, the elderly, the disabled, the children - you will find in most cases that the help is not reaching them.

There is no massive effort, no master plan, to bring back the people who were driven from the city and left destitute by Katrina.

A program called The Road Home provides as good an example as any of how government at all levels is failing New Orleans. Road Home is a state-administered program established to distribute $7.5 billion in federal money (from the U.S. Department of Housing and Urban Development) to people whose homes were damaged or destroyed by Katrina. As of last week the program had distributed money to only 97 out of 90,000 homeowners who have applied. Louisiana officials blame Congress, which took its sweet time -- ten months -- to allocate the money.

But there are problems at the state level as well. The state of Louisiana contracted a consulting firm,
ICF International, to administrate the program and distribute the checks. By mid-December the Louisiana legislature was so frustrated with ICF's slowness that it passed separate House and Senate resolutions calling on the governor to end the contract. As of this writing, however, the contract (for $756 million) remains in effect. You can read more about the problems with Road Home from blogger Ed Dickson, Jeffrey Meitrodt of The Times-Picayune, and Sue Sturgis of Facing South.

At the federal level, it's estimated that at least $2 billion allocated for Gulf Coast reconstruction has been wasted. Hope Yen of the Associated Press wrote (December 25),

The tally for Hurricane Katrina waste could top $2 billion next year because half of the lucrative government contracts valued at $500,000 or greater for cleanup work are being awarded without little competition.

Federal investigators have already determined the Bush administration squandered $1 billion on fraudulent disaster aid to individuals after the 2005 storm. Now they are shifting their attention to the multimillion dollar contracts to politically connected firms that critics have long said are a prime area for abuse.

Last August the House Committee on Government Reform Minority Office (that means Democrats) released a report titled "Waste, Fraud, and Abuse in Hurricane Katrina Contracts." Here are key findings from a press release:

* Full and Open Competition is the Exception, Not the Rule. As of June 30, 2006, over $10.6 billion has been awarded to private contractors for Gulf Coast recovery and reconstruction. Nearly all of this amount ($10.1 billion) was awarded in 1,237 contracts valued at $500,000 or more. Only 30% of these contracts were awarded with full and open competition.

* Contract Mismanagement Is Widespread. Hurricane Katrina contracts have been accompanied by pervasive mismanagement. Mistakes were made in virtually every step of the contracting process: from pre-contract planning through contract award and oversight. Compounding this problem, there were not enough trained contract officials to oversee contract spending in the Gulf Coast.

* The Costs to the Taxpayer Are Enormous. This report identifies 19 Katrina contracts collectively worth $8.75 billion that have been plagued by waste, fraud, abuse, or mismanagement. In the case of each of these 19 contracts, reports from the Government Accountability Office, Pentagon auditors, agency inspectors general, or other government investigators have linked the contracts to major problems in administration or performance.

On the other hand, in November a federal judge found that the federal government had unconstitutionally denied aid to tens of thousands of Gulf Coast residents displaced by hurricanes Katrina and Rita. FEMA was ordered to resume payments immediately. This episode may reveal something about the government's priorities.

Yet if the plan really is to make New Orleans prosperous by freezing out the poor, that plan is failing, also. Manuel Roig-Franzia reported for the Washington Post in December 2005 that contractors were recruiting poor Latinos, often in the country illegally, to take the hard and dirty jobs of cleaning up hurricane debris. Undocumented laborers were expected to work long hours with little regard to their safety, and they were paid below minimum wage if they were paid at all.

A year later -- in December 2006 -- Eduardo Porter reported for the New York Times that New Orleans's fragile health care infrastructure is struggling with the challenge of a Latino baby boom -- infants born to mothers who are mostly uninsured and indigent. And because many of the mothers are in the country illegally, they do not apply to Medicaid on behalf of their U.S.-born babies.

Thus, the city's former deep poverty is being replaced by deeper poverty.

New Deal-style public works projects -- transparently run, with congressional oversight -- could not only have restored infrastructure, but also would have provided jobs with reasonable pay to the devastated residents. And by now those wages would be flowing through the New Orleans economy as residents replaced the appliances, furniture, and other items destroyed by Katrina.

But a combination of greed, corruption, and knee-jerk anti-government ideology instead is creating a second disaster, deeper and more intractable than the devastation of Katrina. That disaster has been unfolding for months, and continues to unfold right now. Billions of taxpayer dollars are disappearing into a black hole of corruption. Former residents -- families, children -- are scattered and apparently expected to fend for themselves. And the underground labor pool the contractors are exploiting may be tomorrow's wretchedly poor residents of New Orleans, clinging to subsistence at the edges of a rich nation.