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Bush Says Private Sector to Lead Hurricane Recovery (Update1)

Jan. 12 (Bloomberg) -- President George W. Bush said recovery in the U.S. Gulf Coast will be led by the private sector and promised continued government aid to help revitalize the storm-damaged region.

``You're going to see a building boom, you just watch,'' Bush said during a speech at St. Stanislaus College in Bay St. Louis, Mississippi. ``The jobs and the quality of life and the recovery are going to be led by the private sector.''

The Aug. 29 storm flooded most of New Orleans, forcing the city's evacuation, and caused extensive damage across Mississippi and parts of Alabama. Almost 1,000 people died. A slow response by federal emergency agencies helped spark a slide in Bush's public approval ratings in national polls.

``There's a sense of optimism, there's a sense of hope, there's a little bounce in people's step,'' Bush said of the changes he's noticed since his last visit three months ago.

Earlier today in New Orleans, Bush told business and community leaders he shared their goal to ``get this great city back.'' The trip was Bush's first to the region since October. ``Folks looking for a great place to have a convention or a great place to visit, I suggest coming here,'' he said.

Bush said the federal government has ``a major role to play'' in reconstructing the Gulf Coast after Hurricane Katrina, and pledged to help rebuild New Orleans levees damaged by the storm.

Rebuilding Plans

The president arrived in New Orleans as local officials and residents are beginning to evaluate a rebuilding plan for the flood-ravaged city that was released yesterday by the Bring Back New Orleans Commission. Among the recommendations are a moratorium on building permits in neighborhoods hit by the worst flooding and creating an independent agency to manage redevelopment plans, according to the commission's Web site.

The National Urban League today said the commission's proposals may violate the rights of Hurricane Katrina victims to maintain their homes and move back. Many of the areas that suffered the worst flooding in New Orleans were predominantly black neighborhoods.

``Our civil rights organization cannot support any plan which amounts to a massive, red-lining scheme wrapped around a giant land grab that does not protect Katrina victims' right to return, recover and rebuild,'' Marc Morial, Urban League president, said in a statement.

`Their Plan'

The federal government will not weigh in on the local plan and has no reaction to such criticism, Donald Powell, the federal coordinator for Gulf Coast rebuilding, said as Bush was traveling to the city.

``It will be their plan,'' he said. ``As they develop the plan, we'll understand that plan, understand the strategies that will be necessary to implement that plan.''

Bush also declined to comment on the local controversy. He said the federal government's role is to help carry out the strategy designed by local officials. ``It's the local folks who design the strategy, and the federal government becomes a partner,'' he said.

The president said the federal government has committed $85 billion to Gulf Coast recovery ``so far'' and about $25 billion of that has been spent. The spending on reconstruction will help widen the federal budget deficit to more than $400 billion this year, an increase from last year's $319 billion deficit, Joel Kaplan, deputy director of the White House's Office of Management and Budget, said today in Washington.

Gulf officials have said permanent housing, stronger levees and tax incentives for rebuilding are necessary for reconstruction. Spending on storm recovery may widen the federal budget deficit this year.

Bush last month signed a law providing almost $8 billion tax incentives for businesses along the Gulf Coast to rebuild and hire, and to help local governments restructure debt.