KATHLEEN BABINEAUX BLANCO, LOUISIANA'S lachrymose governor, wants hundreds of billions of dollars of taxpayers' money so that she can "recreate our communities." You know, the community that appalled the rest of America when wall-to-wall television coverage of Katrina showed us just what it looked like: poor, black, with astonishingly high unemployment and welfare dependency rates. Her desire to recreate that community is understandable; it is the community that put her and the gum-chewing, profanity-spouting New Orleans mayor, Ray Nagin, in power.

President Bush has a grander yet far more sensible vision. Not exactly the construction of a Ronald Reagan-style shining city on a hill, an impossibility since most of New Orleans sits several feet below sea level. But a city that will be built "higher and better."

Following the advice of his other hero, Winston Churchill, Bush sought to recover some of his lost popularity last week by reacquainting Americans with his, and their, natural optimism. "A pessimist," the great Briton said, "sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty." And the president has always been at his best when relying on his can-do, Texas-size optimism.

What Bush did in his nationally televised talk from New Orleans was to satisfy both the compassionate and the conservative. The compassionate will applaud his plans to provide immediate help--food, clothing, medicines, mobile homes, and other essentials--to the 500,000 displaced and stricken, some of it channeled through churches, the Salvation Army, and other private charitable organizations. That is what most Americans expect their government and the private sector to do, and what the president, who is not noted for his devotion to federal parsimony, is calling on Congress to do. The Democrats will complain, and will call for bureaucratic controls on spending, but are unlikely suddenly to become devotees of limited government. They will appropriate the relief funds the president wants so that the displaced can make it through this difficult transition period, a situation not of their own making, and not a time to hold them responsible for the local and state governments they have created and tolerated for too long.

That's the easy part. The harder part is reconstruction. A powerful economic case can be made for the proposition that the new New Orleans should be built as a much reduced city, one that caters to tourists in the manner of Venice and Key West, and becomes a specialized center for energy, transportation of agricultural and other products, and an above-sea-level residential sector for those who service the energy and transport industries. After all, well before Katrina hit, New Orleans was losing population, had a high commercial property vacancy rate, and was hardly in rude economic health.

Fortunately perhaps, economists advise on policy but are not allowed to make policy, or they would face the same political firestorm as Speaker Dennis Hastert did when he suggested that it might be prudent not to spend billions on a city that even under the best of circumstances will remain vulnerable to natural disasters. Economists can tell us what proposals will cost, but not whether the social advantages of those expenditures outweigh those costs. For that we depend on the political leadership of what the president describes as this "great and generous nation." In George W. Bush's view, which is probably the majority view, "There is no way to imagine America without New Orleans."