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

Meanwhile, according to an article by Nicole Gelinas at the Manhattan Institute, New Orleans has earned the distinct honor of becoming the murder capital of the world. The murder rate is 40 percent higher than before Katrina, and twice as high as other dangerous cities like Detroit, Newark, N.J., and Washington, D.C.

Think of this: The idea of using federal money to rebuild cities is the quintessential liberal vision. And given the dreadful results in New Orleans, we can say that the government's $127 billion check represents the quintessential failure of that liberal vision. Hillary Clinton calls this sort of reckless spending "government investment." And that's just what's in store for America if she wins the White House next year.

Remember President Reagan's line during the 1980 campaign about how LBJ fought a big-government spending war against poverty, and poverty won? Well think of all this Katrina spending as the Great Society Redux. And it failed. I suppose the current Bush administration would like to label this "compassionate conservatism." But guess what? That failed, too.

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.