By Kathy Finn
NEW ORLEANS (Reuters) - Thanks to $14.6 billion spent on new flood defenses, roughly $17,400 per resident, Clara Carey and her husband could afford to sit tight in their home when Hurricane Isaac pushed toward New Orleans last week.
"We're senior citizens, and we always said if another Katrina came, we wouldn't come back," said Carey, who lost nearly everything in the flooding that followed the 2005 hurricane and took two years to restore her home in the Gentilly neighborhood.
Isaac would be different, not only because the Category 1 storm was weaker than Katrina, but also because multibillion-dollar work on levees by the U.S. Army Corps of Engineers has given the city stronger protection against hurricanes.
"We felt secure enough not to leave," Carey said.
But Isaac laid bare an uncomfortable truth about the new and improved New Orleans, a tale of two populations - one of neighborhoods that stayed dry behind a world-class system of levees and flood walls and another of suburban communities that were inundated when their older levees failed.
In the Lower Ninth Ward, where a 20-foot (6-meter) wall of water tore homes off their foundations during Katrina, the federal levees held up under Isaac.
But on the north and west of Lake Pontchartrain in towns like Slidell and LaPlace, and in Plaquemines Parish to the south, residents saw widespread flooding that claimed a few lives, spurred rescues from rooftops and caused a surprising amount of damage.
Just as Hurricane Katrina revealed New Orleans' shocking vulnerability to catastrophic flooding, Isaac has revived calls from local politicians to bolster the system to include areas outside the city's protective circle.
But in a post-recession era of U.S. budget-cutting and a fierce partisan divide over the size of government, expanding New Orleans' levees to include over 500,000 residents who now live outside them could be a tough sell.
"The good news is, the post-Katrina system, a $14.6 billion system the federal taxpayer paid for, performed very well," U.S. Senator David Vitter said. But flooding elsewhere "underscores that our work is not done by a long shot," he said.
The flooding sparked criticism in some communities that the new levees had actually caused problems for less-protected areas that lie outside the new system. The Army Corps is conducting a study of the effects of the new levees on the flooding and Vitter has called for an independent evaluation.
The head of the region's primary levee district last week dismissed claims that the new levees were linked to flooding.
"The modeling that the Corps did before they started constructing the system showed that the flood protection works they were about to build would have an insignificant impact" on surrounding areas, said Timothy Doody, chairman of the Southeast Louisiana Flood Protection Authority-East.
Louisiana's other U.S. senator, Mary Landrieu, a proponent of levee building who called the system's performance during Isaac a "miracle," said the Army Corps is woefully under-funded.
"They cannot manage the water in the United States and protect people the way they need to with $2 billion of new construction money every year," Landrieu said. "Louisiana could use half of that ourselves."
Therein may lie the rub for future flood protection efforts in southeastern Louisiana.
While the Corps, with an authorization from Congress, undertook massive construction work after Katrina aimed at protecting New Orleans against the type of storm that has a 1 percent chance of occurring in any given year, it is unlikely that additional construction will occur at a similar pace.
After Katrina, political pressure unleashed a groundswell of funding for Louisiana. The levee system cost about $17,400 for each of the 840,000 residents that the Army Corps says are protected in five parishes.
But with a rising call for budget-cutting by Republicans in the U.S. Congress, the well may be running dry.
Republican presidential nominee Mitt Romney has made federal spending cuts a top priority. Representative Paul Ryan, Romney's running mate, is a budget hawk who cut about $10 billion in disaster aid from the budget passed by the House of Representatives.
That amount was restored in a bargaining session with the White House last summer.
"It's a tough and fallow period for getting more money," said Douglas Brinkley, a historian at Rice University in Houston who has written about Hurricane Katrina. "The challenge is that it's hard to convince people in Wisconsin or Nevada that we should be making Louisiana levees a national priority."
According to Joseph Suhayda, a coastal oceanographic consultant, Hurricane Katrina skewed long-held cost-benefit equations used by the Army Corps to evaluate potential levee projects for New Orleans.
Because the Corps had to acknowledge that its own engineering and construction failings contributed to Katrina's devastation, the U.S. Congress saw fit to suspend normal cost-analysis measures, Suhayda said.
"I think the government was compensating - maybe over compensating - for a performance deficit," Suhayda said.
Others object less to the dollars spent on the levees than to who provides them.
Chris Edwards, director of tax policy studies at the Cato Institute, likens Louisiana flood protection to a construction project in Boston that rerouted an interstate highway through a newly built 3-mile (5-km) tunnel, known as the "Big Dig."
Taxpayers nationwide paid for the project that finally wrapped up in 2007 at a cost of almost $15 billion.
"It's a huge amount of money spent to benefit people in an area of the country with a particular problem," Edwards said. "The problem is you have different people spending the money than the people who are being taxed to pay for the projects."
Edwards said that decisions by Congress to spend such large amounts in local areas is fundamentally unfair "because the money is allocated by politics" and not based on market demands.
"When you have a levee system in Louisiana that's 80 to 90 percent funded by taxpayers who live in other states, then policy makers have a hard time balancing costs and benefits," Edwards said.
(Editing by Chris Baltimore, Mary Milliken and Jim Loney)