Red (face) alert

Every week without a terrorist attack is a kind of victory for the Bush administration, which has staked its future on keeping Americans safe at home. But a series of jolts to the Homeland Security machine last week served as a reminder that media bombshells can also do damage.

The first shock came early last week, when two Democratic senators revealed a new Pentagon initiative that would trade "terrorism futures" in much the same way that speculators can now bet on the future price of corn and soybeans. Investors would essentially buy into various terrorism-related scenarios, such as a coup against the King of Jordan or the assassination of Yasser Arafat-two examples given on the project's official website. The Pentagon would monitor which scenarios were attracting the most cash, under the theory that the market can sometimes predict major crises.

But Sens. Byron Dorgan (D-N.D.) and Ron Wyden (D-Ore.) called the plan "stupid" and "grotesque." "Can you imagine if another country set up a betting parlor so that people could go in ... and bet on the assassination of an American political figure, or the overthrow of this institution or that institution?" Mr. Dorgan asked reporters.

Republicans hurried to agree. "I cannot conceive of any reason why the United States government should be involved in a project of this nature," said Senate Majority Leader Bill Frist (R-Tenn.), while Sen. Pat Roberts (R-Kan.) called the program "absurd" and "way off base."

Within hours, chastened Pentagon officials were trying to assure lawmakers that they would immediately pull the plug on the futures proposal. Deputy Defense Secretary Paul Wolfowitz said he had never heard of the plan until the media firestorm that erupted on Monday. "I share your shock at this kind of program," Mr. Wolfowitz told a Senate panel the next morning.

That wasn't enough for Sens. Dorgan and Wyden, who want to stop all funding for the Terrorism Information Awareness (TIA) program, which would allow the Pentagon to tap into computer databases for individuals' medical records, travel itineraries, and financial data. TIA was developed by the same personnel who floated the futures proposal-proof, according to the Democrats, that the Pentagon's anti-terrorism efforts have run amok. By late last week, John Poindexter-the Pentagon official in charge of the Defense Advanced Research Project Agency-resigned.

While the Pentagon was working on damage control, the Department of Homeland Security was warning airlines of a new terrorism threat. "As of mid-June, Islamic extremists may have been planning suicide hijackings to be executed by the end of summer 2003," said the "information circular" sent out to airline officials and law-enforcement agencies. "Attack venues may include the United Kingdom, Italy, Australia, or the East Coast of the United States." Airlines were warned to watch for five-person hijacking teams using everyday objects, such as cameras, that have been modified as weapons. The hijackers might try to convince passengers that they were in a "normal" hostage situation in order to avoid the kind of uprising that foiled one of the four suicide missions on 9/11.

The new warning set off a wave of jitters at the height of the busy summer travel season-jitters that weren't exactly eased when The Washington Post reported the next day that air marshals were being cut back because of budget constraints. Facing a $900 million budget shortfall, the Transportation Security Administration (TSA) is seeking approval from Congress to trim just over $100 million from the program that puts armed, undercover agents on many flights, according to published reports.

That drew outrage from Democrats, who have tried for months to beef up spending on the air-marshal program. "The bottom line is the Homeland Security agency is like the proverbial bed where there are five children and enough covers for four," complained Sen. Charles Schumer (D-N.Y.). He blamed the shortfall on the expensive war in Iraq that leaves domestic priorities underfunded.

After initially downplaying the budget crunch, the administration admitted last week that marshals' schedules had been shuffled the previous week in an attempt to save money. But Asa Hutchinson, the undersecretary charged with border control and transportation issues, quickly released a letter to TSA chief James Loy authorizing new reinforcements "to augment current FAM [Federal Air Marshal] resources and provide additional resources on high-risk flights and routes."

Despite all this, plus the seemingly specific nature of the airline threat, the Homeland Security circular said the agency continued to have "questions about the viability of the plot." They also stressed that "no equipment or operatives are known to have been deployed to conduct the operations"-and they declined to raise the threat level from yellow to orange.

Even if the embarrassment level was clearly at red.