NEW ORLEANS — Promising the battered Gulf Coast "one of the largest reconstruction projects the world has ever seen," President Bush stood in New Orleans' French Quarter last night and declared, "This great city shall rise again."

Bush proposed initiatives to help evacuees find jobs and give them a chance to get free federal land for new homes. When the area is rebuilt in the aftermath of Hurricane Katrina, he said, it should confront poverty and "rise above the legacy of inequality" so people can return to jobs and houses they own.

So far, the government has spent more than $13.7 billion of the $62.3 billion approved by Congress, according to a report filed yesterday. The final cost is expected to be much higher.

The House and Senate yesterday passed similar tax bills estimated to cost at least $5 billion over five years to allow storm victims to draw funds from retirement accounts without penalty and to extend several housing, job and child tax credits through the disruption. The legislation also offers incentives for charitable donations. Congress is also planning legislation involving health insurance for the poor, unemployment benefits and welfare.

Some officials and lawmakers believe the cost of Bush's proposals could top $200 billion, and the issue is certain to reorient government and the remainder of the Bush presidency.

It will create much larger deficits in the short term, siphon off money that would have been spent on other programs, and dramatically shift the focus of the White House, Congress and many state governments for the indefinite future.

Critical timing

Highlights of Katrina aid


Some details of President Bush's aid package for Hurricane Katrina victims and regions:

Health: A 100-percent reimbursement to states to cover their costs of health care for treating some evacuees from Aug. 29 through Jan. 1, 2006.

Education: $1.9 billion to reimburse states for the cost of educating displaced students. The money could go to religious schools. Six-month forgiveness on student-loan interest for affected areas, at an estimated cost of $100 million.

Employment: Individual worker recovery accounts of up to $5,000 for job training.

Economy: Gulf Opportunity Zones with loans, tax breaks and incentives costing $1.7 billion over five years.

Housing: Homesteading lottery for low-income refugees to move back into the area.

The Associated Press

Bush's address comes at a critical point in his presidency, largely a result of what Washington-based pollster Andrew Kohut called "a summer's worth of bad news" — soaring gas prices, escalating violence in Iraq and, finally, Katrina.

Bush has seen his job-approval ratings plummet to the lowest level of his presidency, fueling speculation about his ability to govern effectively in his remaining years in office.

Many of Bush's key initiatives — restructuring Social Security, eliminating the estate tax permanently, changing the tax code — were facing declining odds even before Katrina devastated New Orleans and other regions of the Gulf Coast.

While he embraced a program the scale of which few Democratic presidents have ever advanced, Bush also signaled plans to use the reconstruction to enact long-term political goals, such as the tax changes.

Adopting a policy option typically used in much smaller scale, he proposed creating an "opportunity zone" in Louisiana, Mississippi and Alabama that would grant new and existing businesses a variety of tax breaks, loans and loan guarantees through 2007.

And in documents released before the speech, Bush called for displaced families that send their children to private schools, including religious ones, to be eligible for federal money.

Workers who have trouble finding jobs could be eligible for Worker Recovery Accounts, giving them up to $5,000 for job training or support services such as child care and transportation.

Homesteading initiative

The president also proposed an Urban Homesteading Initiative, which would help low-income evacuees resettle in government-owned properties in the disaster area. A lottery would be held to allocate building lots free of charge among evacuees. These new owners would pledge to build on the site, either by obtaining a loan or with help from charitable organizations such as Habitat for Humanity.

Wearing no tie or jacket, Bush spoke for 22 minutes from the French Quarter's Jackson Square, with St. Louis Cathedral and a statue of Andrew Jackson as a backdrop.

Bush press secretary Scott McClellan said the electricity and other resources needed to support the president's speech — to provide television lighting, for example — were provided by generators brought in by the White House.

Bush acknowledged that the chaotic initial response to Katrina showed that disaster planning is inadequate and again took responsibility for failures by the government.

Bush also called for the development of plans to respond to natural disasters, disease or terrorist attack, and for evacuating large numbers in an emergency. "I consider detailed emergency planning to be a national-security priority."

Sen. Harry Reid of Nevada and Rep. Nancy Pelosi of California, Democratic leaders in Congress, said Bush had "comforting words but the victims don't need just words, they need a plan that will lead the way in recovery, rebuilding and renewal."

Local determination

Bush made it clear that local officials will dictate how New Orleans is reconstructed, and that a chief aim will be to lure those who fled the city and other Gulf Coast communities to return rather than relocate permanently to the places where they sought refuge.

The president called for "bold action" to address the long-standing poverty in the region that the crisis only worsened.

In recognition of the economic disparities laid bare by the hurricane and its aftermath, Bush spoke of using this moment to confront endemic destitution born out of prejudice.

"As all of us saw on television," he said, "there is also some deep, persistent poverty in this region as well. That poverty has roots in a history of racial discrimination, which cut off generations from the opportunity of America. We have a duty to confront this poverty with bold action."

The speech capped a weeklong effort to restore Bush's standing, starting with the ousting of the Federal Emergency Management Agency director, who oversaw the initial response, and a rare public embrace of responsibility for shortcomings.

A New York Times-CBS News poll released yesterday found that 73 percent of respondents expected higher taxes as a result of Katrina, and more than half said they were willing to pay higher taxes to help with the Katrina recovery.

Compiled from USA Today, The Washington Post and Los Angeles Times reports