The big challenge in the Big Easy

Hurricane Katrina devastated the Gulf Coast in ways that were predictable, but which as a nation we chose to ignore.

We hope the same thing will not be said in a few years about the impact of the hurricane's aftermath on our nation's economy.

The funding crisis we face is immense. So far it is expected that the federal government will spend at least $200 billion to rebuild New Orleans and the Mississippi and Alabama towns flattened or flooded by the storm. Probably, when it's all over, the cost will be much higher.

And that comes on top of the costs of the Iraq war - which means we are further than ever from a balanced budget.

Something, eventually, has to give.

Just as the storm surge of a hurricane can overwhelm an old levee system, so too the high tide of deficit spending will eventually push over the wall of denial built up by politicians who want to give everybody everything.

Much better than cleaning up a huge fiscal mess in 10 years would be taking a reasonable approach now. Let's figure out where the money to rebuild New Orleans is coming from, and let's make sure it's spent wisely.

Everything should be on the table - at both ends.

On the funding side, we must be willing to consider some kind of increased tax burden. It might come in the form of a "Katrina surtax" - with a defined life span; it might come in the form of repeal of certain tax cuts approved over the past few years. We also should consider cutbacks in non-essential programs (please don't tell us there are none). And the idea of "Katrina bonds" would tap the generosity of the American citizenry to bankroll the recovery effort directly.

At the other side of the table, let's consider what we are getting for our money. New Orleans, when it is rebuilt, will be a much different city. It behooves us to take a little time to consider what that city will look like, both because of the vulnerable geography on which it stands and because of the demographics of a city coming back from catastrophe.

Many of the best and brightest New Orleanians will have long since left the city permanently. Those who are most employable will have taken jobs elsewhere; those who have capital to invest may have decided to seek greener pastures. Many of those who remain will belong to the criminal underclass and they will be ready to pounce to take advantage of the money streaming into the area.

With the city's history of corruption and indifference, it will be up to the federal bureaucracy to be ever vigilant to make sure money is going where it is supposed to, and it will be up to all of us to make sure that the New Orleans that is rebuilt makes sense as a city and is not just a glorified theme park.

And that's just the problems we face in New Orleans. Extend that to the rest of the Gulf Coast, and we face a domestic challenge perhaps rivaled only by the Great Depression and the aftermath of the Civil War.