Hastert is an ass. But...
Yes, Hastert is a dick, no question about it. And though I think his "doesn't make sense" statement was taken a wee bit out of context, it was still a dumb shit thing to say. But let's ignore the fact that it came from a dipshit and give it more thought.
From a purely practical return-on-investment perspective, it really doesn't make sense to spend billions making New Orleans inhabitable. As we all know by now, it's a fucking saucer and even otherwise non-deadly storms can cause water to overflow and the levee system does a nice job of trapping the water.
And there is the economy - socio, macro and otherwise. Deep South ain't the most hopping place economically and something has to keep New Orleans from turning into the set of City of God 2, right? On one hand, you got have people without homes and the means to rebuild (and shit, not to mention finding jobs) and on the other, businesses moving out. You're going to need more than a Telethon or two.
Other cities have overcome total destruction before - Chicago and San Francisco come to mind. But Chicago doesn't have the inherent topographic limitations and both cities were, and are still vital to the regional and national economies. Even so, it took decades to rebuild Chicago and San Francisco.
What New Orleans does have though, is its location at the mouth of the Mississippi. Otherwise, I'm not sure where to hang its hopes on. So while the cost required to rebuild it will be insane, it will be done out of pure necessity.
And another silver lining is that many of the contributing factors were man-made, namely lack of preparedness. From letting the levees go to disrepair to not having a proper evacuation plan, there are things New Orleans can do better if anything like this strikes again (and as a firm believer in the law of averages, I'm going to call New Orleans the Safest City of 2006). That's the thing with human as stupid as they may seem in hindsight, they're correctable.
Oh, and let's talk about those errors. Tim Naftali calls out Bush and Dept of Homeland Security. "Chertoff's Department of Homeland Security demonstrated today that it could organize an impressive press conference in Washington.." begins one of the milder critiques (meanwhile, Fred Kaplan looks at DHS budget and structure).
And apologists of government officials need to do themselves a favor and check out the Times-Picayune's five-part series Washing Away, which studies the potential damage "the big one" could do to NO. It's eerily prophetic (or just points out predictable shit, I don't know) when it predicts things like the dangers of the levees, the poor being left behind in a mass evacuation, and the Superdome as refuge/death trap.
Finally, Douglas Rushkoff opines on the current state of New Orleans in about the strongest tone I've seen him take:
What those who are afraid of civil society breaking down don't realize is that civil society has already broken down! This is not a civil society we live in, but a profiteering, every-man-for-himself, oligarchy. The democratic process is broken if not rigged; the largest-ever redistribution of wealth from the poor to the rich occurred over the last six years under the guise of economic stimulus; fear and disinformation were used to put the poorest of Americans onto a battlefield under false pretenses; those who seek to engage the current administration in meaningful dialogue are terminated.